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2020 has been a storm of a year. The year began as predicted with the UK recruitment market booming and the year set to roll out as generally forecasted. But as coronavirus hit the UK, all recruitment plans came to a sudden halt and the industry underwent a huge transformation.

This article will explore how different aspects of the UK recruitment market in 2020 have evolved in response to the pandemic including IR35, unemployment rates and the role of tech in recruitment.

Key Points:

  • UK unemployment rate hits 3 year high
  • Recruitment industry increases its use of AI and tech
  • Changes in IR35 legislation on hold until April 2021
  • Logistics, warehousing and supermarkets among vacancy leaders
  • Increased number of employers seeking temporary workers

How has the pandemic affected the UK recruitment industry?

Unemployment rates experienced a high

Unemployment rates have experienced two polar opposites during 2020. At the end of 2019, UK unemployment rates had hit its lowest point since 1975. As a result, the recruitment market was very much candidate-driven. With opportunities being in plentiful supply, candidates had the luxury of finding new jobs in a short timeframe and recruiters were stretching to any means necessary to headhunt candidates.

Fast forward 8 months, unemployment rates in the UK have recently topped the rates recorded in 2016 reaching 4.8%. Whilst the unemployment rates are still a far cry from the 8.5% high experienced during the 2012 recession, the rates continue to move in an upward trajectory.

As a consequence, the recruitment market has flipped on its axis to become a predominantly client-driven market with increased competition for job-seekers. Because of the uncertainty, employers are more reluctant to make hires and are finding it difficult to form long-term plans.

Certain industries proved themselves resilient

Although most industries have experienced a sharp decline in vacancies, there have been some sectors which have continued to recruit more steadily than others – albeit still with a decrease in vacancies.

Industries continuing to recruit throughout pandemic

  • Warehousing & logistics– The increase in online shopping has naturally created a need for more warehouse workers and drivers. For example, the demand for HGV drivers increased by 7% in the first week of July.
  • Supermarkets– Major supermarkets such as Aldi, Lidl and Morrisons announced plans to hire more employees to respond to the changing market.
  • PPE– Companies able to support the demand for PPE have hired new employees to produce items such as sanitiser and face masks.
  • Tech – With the fast transition to Work From Home life, tech companies have continued to hire for key positions to facilitate the new demand. Roles in the digital tech sector grew by 36%from June to August alone.
  • Healthcare – In response to the pandemic, the healthcare sector experienced an even sharper rise in vacancies than the Tech sector.

Industries experiencing the sharpest decrease in vacancies throughout pandemic

  • Retail –With a large portion of shops shutting throughout the lockdown period, there has naturally been less hiring for the retail sector
  • Hospitality –The restrictions placed on the hospitality sector have inevitably lead to a recruitment halt
  • Travel –Travel restrictions have decreased the demand for related roles

Changes in IR35 legislation were postponed

The UK was anticipating the arrival of IR35 in April 2020,. However, due to the disruption caused by the pandemic, the government has graced employers with an extra year to prepare for the changes.

The recruitment market is anticipating a decrease in contract workers as a result of the new legislation. Employers and recruitment companies are currently taking this time to map out new processes and procedures to ensure they remain compliant under the changes in the IR35 legislation. The new legislation will shift the responsibility onto employers to determine whether or not a worker falls under a permanent or contract worker category.

Increased interest in temporary workers

Although employers are anticipating a large number of contract workers to switch to permanent employment as a result of IR35, the pandemic witnessed an increased tendency to hire temporary workers amidst all the uncertainty.

Research showed that employers’ intentions to hire temporary workers had increased during the pandemic and had been at its highest since October 2019. In periods of uncertainty, it is common for businesses to hire temporary workers to avoid entering into any long-term agreements with permanent employees.

Businesses adapted to remote working

At the start of 2020, predictions pointed to an increase in remote and flexible working. Evidently, this prediction has materialised but far surpassing the expectations due to the outbreak of COVID-19 and Work From Home orders.

The new remote working way of life has transformed recruitment. With employers becoming habituated to remote workers, recruiters now have a wider pool of candidates to choose from as hiring managers open up their vacancies further afield.

Technology in recruitment improved

It’s been long-predicted that AI and tech would come to play a bigger role in recruitment. However, the pandemic, once again, has accelerated this innovation.

With businesses facing difficulties to meet candidates face-to-face, the outbreak of the pandemic saw a 67% increase in recruiters using video interviewing software. Not only is this a practical way of allowing the hiring process to take place in the current climate, but it’s also a time when recruiters are striving to stand out from their competitors. Offering a video service is one way that agencies are differentiating themselves from their competitors in hope of winning and retaining new business.

The increasing use of AI in recruitment has long been anticipated and the year 2020 has continued on that trend. Below are some of the ways that recruitment companies are using AI:

  • Using chatbots to direct candidates to vacancies
  • AI to shortlist qualified and interested candidates
  • AI to profile candidates on LinkedIn and produce suggestions on how recruiters should interact with them
  • Automated texting and emails
  • Automation of interview scheduling

A glimpse into 2021

The volatility of 2020 has undoubtedly caused a huge disruption to the recruitment market. From freezing hires in certain industries to remote working across the entire nation, the recruitment industry has experienced great turbulence. Although there have undoubtedly been setbacks for the industry, the pandemic has also accelerated innovation and growth in some areas such as AI and remote working.

Still in the midst of the pandemic, it is unclear what 2021 will hold. It remains to be seen how the recruitment industry will respond to the changes in the IR35 legislation, creeping unemployment rates and the impact of Brexit. What is certain is that the industry has shown a huge amount of resilience and bounce-back ability, which is certain to flow into 2021.

IMS People Possible specialise in outsourced recruitment services. To find out how we can support your business, call our UK advisor, Julieann Fouad, on + 44 203 878 3559 or reach her by email: