The UK Recruitment sector is experiencing a profound period of growth as economic indicators point to an economy that has clearly bolted out of the “starting blocks” as the roadmap to lifting Covid-19 restrictions was travelled culminating in the so-called “Freedom Day” on 19th July.
August has seen a slew of data to support this picture of prosperity in the people sector. It was confirmed that the UK economy surged by 4.8% in the second quarter as covid restrictions were eased and an ever-greater proportion of people received vaccines. The Chancellor, Rishi Sunak, welcomed the news and, notwithstanding the continued high level of infection rates and covid related deaths (averaging close to 100 a day at the time of writing) struck a positive note stating “I know there are still challenges to overcome, but I feel confident in the strength of the UK economy and the resilience of the British people.
Signs of a buoyant economy are also revealed in rising inflation (which doubled to 1.5% in April) now standing above the Bank of England’s target of 2%. Indeed, it reached 2.5% in June this year and the Bank now considers that it could rise above 4% later this year.
JOB ADVERTS BOOMING
The UK labour market is buzzing. The Recruitment & Employment Confederation (REC)’s “Jobs Recovery Tracker” issued in mid-August revealed that there were some 1.65 million active job adverts in the UK in the first week of August with some 204,000 new job adverts posted in the same week; the 4th highest weekly figure since the start of the pandemic.
As Kate Shoesmith, Deputy CEO at REC, stated, “Since the final COVID restrictions were lifted in July, the number of new job adverts has continued to ramp up. Employers are desperate to find good staff to help them recover and grow in the coming months. Recruiters are working flat out to help find the best people..”
Research from the Association of Professional Staffing Companies (APSCo) and Cube 19 (published in August) support the above showing that vacancies across permanent and contract segments of the UK recruitment market rose by 43% and 53% respectively in July 2021. In the words of APSCo Chief Executive Ann Swain, “The professional recruitment sector clearly has a major part to play in our continued road to recovery.”
Furthermore, this buoyancy in the UK labour market was confirmed by figures released by the Office of National Statistics on 17th August stating that the number of temporary employees had grown to 1.61million for the quarter to June 2021, a rise of 7.9% compared to a year ago. The ONS figures also confirmed that the UK unemployment rate had fallen to 4.7% compared to the previous quarter and that the number of job vacancies in May to July 2021 was 21% above the pre-pandemic level (the quarter to March 2020).
Neil Carberry, Chief Executive at the REC, commenting on the ONS data said: “The robust jobs recovery suggested by the business surveys is confirmed in today’s figures, and that is great news.”
RECRUITMENT BUOYANT ACROSS MULTIPLE SECTORS
What is fascinating is that the latest data referred to above confirm a trend across recent months of a rapidly recovering recruitment sector and recovery across multiple segments of the labour market. This is remarkable when one recalls the huge uncertainty, economic and social, as covid deaths grew significantly over the period toward the end of 2020 and the first quarter of 2021 with record numbers of patients in the hospitals.
The data tells a story of the labour market’s recovery over the past few months once a roadmap out of the lockdown restrictions was signalled.
For example, in April’s KPMG/REC “UK Report on Jobs” Survey, there were clear indications of permanent and temp billings rising sharply in March 2021 with the survey revealing the sharpest rise in permanent placements for almost 6 years. The report also pointed to vacancies expanding at the quickest pace since August 2018.
The May Report on Jobs from KPMG/REC evidenced accelerating labour market confidence and activity. It showed that in April (so three months before all COVID restrictions were finally lifted in England) the pace of growth in permanent placements was at its highest since October 1997!
The accelerated activity was witnessed across many sectors thus spreading the potential rewards across recruitment agencies across much of the industry.
The Report on Jobs in May, for example, highlighted that the steepest rise in permanent staff vacancies in April was in the IT & Computing segment of the market and followed by the Accounting/Financial and Engineering segments of the market. Retail was the only sector to register a lower demand for permanent staff.
But the report also confirmed that all ten monitored job categories recorded higher demand for temporary staff in April (other than Retail) with Blue Collar and Construction registering the strongest increases in demand for temporary talent.
Subsequent months have seen this trend affirmed including for Drivers, hospitality and HR professionals. Again, this has been aligned to surges in business confidence as the deadline to lift all COVID restrictions approached.
Recent trading updates and results from listed and larger UK recruitment businesses have also evidenced the remarkable recovery in the sector and the labour market.
Robert Walters Group, for example when releasing its Q2 trading update (for the period to 30th June 2021), celebrated group net fee income rising by 31% for the second quarter of 2021. It added that whilst growth was strongest across the Asia Pacific and Europe (80% of its NFI is from international operations) all regions had returned to net fee income growth.
Robert Walters, Chief Executive, commenting on the trading update, stated:
“Candidate and client confidence has continued to improve across all the Group’s regions….we will be investing in additional headcount in those geographies and disciplines showing strongest signs of sustained growth.”
The update showed that NFI was up 9% in the UK with recruitment levels highest in London across finance, legal and technology.
SThree also posted strong half-year results for the first half of 2021 with operating profit increasing by 106% compared to 2020 half year. The results showed net fees growing by 10% when compared to 2020 with Technology and Life Sciences net fees up significantly. Mark Dorman, CEO at Sthree, commented, “Our profit has grown substantially from HY 2020 and has surpassed the pre-pandemic levels of 2019..”
NEW WAYS OF WORKING
The ubiquity of flexible working as a long-standing trend and also new (pandemic affirmed) hybrid ways of working have benefited the recruitment sector as employers and employees adapt and embrace change.
We have already seen the statistics from the ONS (published in August 2021) showing the rise in the number of temporary employees in the UK to 1.61million for the quarter to the end of June 2021. This now means that temporary workers comprise 5.8% of the total workforce, which is a rise from 5.4% a year ago. Of interest (in terms of the dynamic changes in the nature of the labour market) is that the ONS data revealed that whilst 535,721 people worked temporarily because they could not find permanent roles, 385,674 stated that they did not want a permanent position.
Recent research from Microsoft (April 2021), cited by Staffing Industry Analysts in their Daily News, underpins the importance of these new trends. Microsoft Research found that 71% of UK workers wanted the flexible work options established during the pandemic to remain in place. In addition, 37% said they were more likely to move to a new location over the next 12 months due to the ability to work remotely.
In addition, a Report (entitled “No Going Back: The UK’s irreversible work/life shift”) from Fujitsu from April 2021 found that a large majority of C-Suite leaders (85%) and employees (71%) in the UK supported the idea that hybrid working will help their organisations better deal with economic cycles.
John Pink, Fujitsu UK’s Managing Director (Private Sector) commenting on the report said: It’s the brave new world of the digital workforce. With only 18% of people wanting to return to the office full time, a hybrid working model gives people the flexibility they need to do their best work and live their best lives.”
This all means that Recruiters and employers now have potentially much richer pools of talent to choose from on the basis that workers can undertake their duties “working from anywhere,” so geographical barriers are less impactful potentially.
SKILLS SHORTAGES AND CHALLENGES AHEA
The challenge however is finding enough workers to fill vacancies to adopt these new ways of working!
It is now evident and indeed has been throughout the bounce back referred to above that the UK and therefore employers and recruiters face an ever-growing shortage of candidates. It is perhaps the most pressing immediate practical challenge for the UK labour market and the wider UK economy as we approach the end of the summer and the winter ahead.
Research published by the British Chamber of Commerce (and published in July 2021) found that the majority of employers were facing difficulties finding staff. The research added that 71% of the UK employers that were planning to recruit staff were, for the second consecutive quarter in Q2 2021, facing challenges in recruitment. Construction and Hospitality, and Catering were the segments with the highest proportion of employers facing such difficulties.
In the words of Jane Gratton, Head of People at the British Chamber of Commerce: “As firms are released from lockdown restrictions, the skills and labour shortages they experienced before the pandemic are once again starting to bite. The encouraging increase in job creation across the manufacturing and service sectors is being held back by recruitment difficulties at all skill levels, jeopardising growth and productivity.”
These challenges have been echoed by leaders within the recruitment sector. Bev White. For example, Chief Executive at Harvey Nash Group, when commenting on the ONS data showing the rise in temporary workforce, stated: “…vacancies have also risen to a record high- underlining there is a real war for talent going on in the UK. Skills shortages and availability of candidates are significant problems in many areas including the UK tech sector.”
Commenting on the same ONS figures REC CEO Neil Carberry agrees: “Record vacancy numbers again emphasise the risk posed by labour shortages in many key sectors. The number of vacancies is now at an all-time high and is still rising, with employers desperate to hire new staff as the economy recovers.”
As vacancy numbers have risen –evidenced by the monthly Report on Jobs from the REC and KPMG- there have been calls from both APSCo and REC (and others) to ensure that workers have access to the ability to upskill and reskill in order to meet the demand from employers. There is also clearly a need for more comprehensive workforce planning.
In addition to this, demands have become ever more vocal for strident policy initiatives from the Government across immigration and economic policy.
Ann Swain, CEO at APSCo, echoes an ever more united call when she says; “We wholeheartedly endorse the calls from the CBI that the government must review its post-Brexit immigration policy to avoid dire skills shortages.”
Neil Carberry agrees and acknowledging that skills shortages are a long term issue which pre-date the pandemic; he adds that: “Employers will have to improve workforce planning, invest in skills and improve their offer to candidates if they want to hire. But they will also need help from the Government to solve this issue. That means an effective, long term plan on skills and training…”
There are clearly many levers of policy and practice that will need to be leveraged if the skills shortages are to be overcome. These will also include ensuring that Diversity and Inclusion remain centre stage to give equal access to all groups of workers not to mention continued vigilance in respect of the wellbeing and mental health of those in work to drive retention.
Broader factors will also no doubt play an important role in the labour market and therefore upon recruiters, including the impact of the end of the furlough scheme, the extent of any fiscal retrenchment from the Chancellor in the autumn as he seeks to rebalance the public finances and of course the on-going presence of COVID both in terms of current (and future!) variants and infection rates post the summer and onset of winter.
Notwithstanding the uncertainties ahead, it is perhaps apposite to conclude with reference to the latest CIPD (Chartered Institute of Personnel and Development) Labour Market Outlook Survey published in mid-August which found that confidence among UK employers had reached a 9-year high.
It also found that when faced with hard to fill vacancies, 44% of employers said they would upskill existing staff, 26% said they would hire more apprentices, and 23% said they would raise wages.