As we come to the final weeks of 2022, the employment landscape in the UK remains largely unchanged. The challenges that recruiters and employers face persist at the close of Q4.
Just like the months before it, November saw high numbers of vacancies amid a significant shortfall of candidates. Add to this a UK unemployment rate at a record low, and this is a troubling picture, not just for businesses looking to hire, but for the UK economy.
Despite economic uncertainty, the hiring intentions of UK businesses remain strong. Between August and October, the sentiment to hire both permanent and temporary roles rose by at least 1% compared to the previous 3 months.
Intention to hire is something that we can attest to here at Ignite. Our clients have been issuing us with roles and requirements consistently throughout the year, and we’ve seen no shortening of hiring intention between Q1 and Q4.
However, it is worth mentioning that this intention does come with an apparent note of caution. Compared to the previous quarter, open vacancies are taking longer to fill; an average of 2 months. Of course, this could be explained by the lack of candidate availability and skills shortages. However, it should also be considered that client hesitancy to ‘sign off’ is a factor in the lengthening of the process. Decision-makers are wary to commit among growing economic instability and rising costs.
Beware the hesitation.
In the current jobs market, hesitating over making an offer is likely deter your dream candidate more than any other opposing factor. As we advise our clients, never have skilled job seekers held a hand of cards so strong. Sky high salaries, counteroffers, and an abundance of options mean employers must act quickly or risk losing out to a rival offer.
Here is how the recruitment landscape has played out in the UK over November.
The Recruitment Landscape. November 2022.
Vacancies.
Although still higher than average, November recorded the weakest overall rise in vacancies for the last 21 months. This was largely driven by a softer upturn in the permanent market. Permanent job roles expanded at the weakest rate since February 2021.
The growth in the demand for contract staff also hit a 21-month low, but still beat the average and remained sharp overall.
Looking more deeply into the private and public sectors, the data suggests that the largest increase in demand was for temporary staff in the private sector, while temporary workers in the public sector fell for the first time in 2 years.
The demand for permanent workers remained strong overall and moderated across both private and public markets.
The ONS says…
The number from the ONS gives us an idea of the national picture and it confirms the reports from our recruiter colleagues. Between July and October, the total number of vacancies across the UK fell by 46k qtr/qtr. This brings vacancy numbers to 1,225,000; the lowest figure since November 2021.
However, this is just a softening. Vacancies today are still higher by historical standards. They are nearly 50% than pre-pandemic levels. In the 3 months to February 2020, the UK listed 823,000 vacancies.
Vacancies by sector.
8 out of the 10 recorded job categories registered an increased demand for permanent staff throughout November. Notably though, IT and Computing recorded a slight reduction.
When looking at the temporary market, we witnessed a broad upturn in demand across all 10 categories. However, mirroring the permanent sector, IT and Computing recorded only a marginal rise.
Demand for skills.
Across the permanent IT and Computing sector, the demand for skills lies with
- Automation Testers
- Cyber Security professionals
- Data engineers
- Developers
- Infrastructure Analysts
- Software Engineers
Interestingly, our private sector clients have enlisted our help to fill roles within every single one of these skills groups. Without exception, our clients are progressive technology disruptors. They are creating products, platforms and services designed to enhance the digital experiences of users, customers, and their own employees. Digital transformation is at the heart of their agenda. It isn’t surprising that these roles and their requirements reflect the broader direction of travel.
Staff Appointments.
Permanent.
For the second consecutive month, our recruitment colleagues across the UK report a reduction in permanent staff appointments. Caution over the economic outlook has largely been blamed for this drop. Financial uncertainty has created a lower candidate supply and a reluctance to leave established jobs for new challenges, while client side there is an evident hesitancy to hire.
Permanent placements were lower across 3 of the 4 monitored regions of the UK. The quickest reduction was seen in London, while the Midlands was the only region to buck the trend. Central consultants recorded a modest rise in placements.
Temporary and contract.
Broadly speaking, there has been a plateau in temporary billings since the start of Q4. However, temporary billings lifted again in November. However, the rate of expansion was mild and significantly slower than the running trend we saw in Qs 1-3.
Why?
Economic instability lends itself to the temporary market. Without the commitment of permanent hires, temporary staff are often quick to start and can hit the ground running. Temporary staff can be scaled according to need or project, enabling employers to create an agile and adaptable workforce.
Staff Availability.
Candidate supply continues to fall but did so at the softest rate in 19 months across November.
This is true for both permanent and contract candidates.
Permanent.
November stretched the decline in permanent candidates to 22 months, although the rate of reduction was the lowest since April 2021. As with the months before it, a tight labour market, hesitancy to seek or switch roles and a lack of foreign workers have been cited as causal factors in the continuing pattern.
Temporary and Contract.
The volume of temporary staff also continued its trend in November. This too saw a reduced rate of reduction; the slowest since March 2021.
Among the temporary market, it’s suggested that the preference for permanent work, the low unemployment rate and fewer overseas workers has contributed to the negative trajectory.
Pay and salary.
Starting salaries have risen steadily month on month since March 2021, and November was no different. Although salary did increase again last month, the rate of the inflation did soften for the 8th month in a row.
Competition for staff is severe, and companies are turning to salary to secure and attract fresh talent.
Our colleagues in the Midlands reported the largest rise in salary.
The ONS says…
Regarding pay and reward, the ONS reported that employee earnings rose +6% year on year over Q3. On top of this, the rate of pay of growth remained the highest we’ve seen over the past 15 years. As we’d expect, employees in the private sector enjoyed a higher increase in earnings; +6.8% vs the public sector’s +2.4%.
In conclusion.
As the numbers suggest, the recruitment trends across November remain largely the same as in previous quarters. And although there has been “softening” to the extremes, the trends and headlines don’t get less concerning.
The Institute for Employment Studies highlights that the UK is the only 1 of the 5 developed economies where employment remains lower than before the pandemic. The need for growth is evident. September witnessed the UK GDP fall by 0.6%.
Businesses and the government must come together. Boosting the labour market relies upon the delivery of a joined-up strategy; one that delivers skills, empowers people and supports businesses. These factors must join up to create the capacity for the economy to grow.
The recruitment sector is pivotal in the success of this. Recruitment professionals understand the current and future demands of the sectors in which we work. We are aware of both the job skills businesses need and the wider market.
Both hiring and job-seeking cautions are likely and widely understandable. As we come to the close of 2022 and enter 2023, it’ll be fascinating to see which direction these trends will take.
