Chris Morrison APSCo, REC, recruitment industry...
Like baby birds in a nest, the different sectors of the economy are straining to be fed, their mouths open and begging the Chancellor to attend to their needs first. However, nature, as we know, is red in tooth and claw and predators and cuckoos also play their part, as they do in business, so not every fledgling makes it, despite their parents’ best endeavours. And for companies, when it comes to deciding what roles survive and which new jobs to bring to life, it’s not just the judgement of Solomon that’s required, but a balanced, rational overview of the job market and where it might be heading.
With the caveat that we have no monopoly of wisdom here, only our own, specialist experience, knowledge and contacts, trying to make sense of all this is no easier for Cedar Recruitment than it is for the Chancellor (albeit his remit is just a touch bigger!). But the cumulative impact of the small decisions made by firms like ours, our clients and our candidates, influenced, naturally, by government’s actions, will contribute massively to deciding how, when and to what extent the job market recovers…
The recruitment nest that seemed so well feathered for so many years is now, for some agencies, a motley collection of broken twigs. From floating serenely on a cushion of full employment and candidate shortages, rising demand (and healthy fees), we are now in a position where it is inconceivable that every recruitment firm will survive the depression. Our job-board contacts, of whom more below, tell us that they anticipate many of the smaller recruitment agencies going to the wall. They say this applies especially to those who have feathered their nests but not put anything aside for a rainy day. The result will be that those remaining can increase their market share if they – like Cedar - realise that the adoption/adaptation of different working practices, underpinned by an increasingly savvy use of technology, is not an option; it’s a necessity.
In the year to March 2019, turnover in the UK recruitment industry reached nearly £39 billion, and there were 31,140 firms in the industry, up 2% from the previous year, with staff numbers increasing by 3% to c. 119,000 people. Covering much the same period, the Office of National Statistics (ONS) reported (May 2019) that there were some 846,000 vacancies in the Feb-Apr 2019 period (see Fig 1 below).
Figure 1 (Source: ONS)
The steady climb from the downturn of 2007-09 (laughingly called the ‘Great Recession’ at the time) is evident. This rising tide lifted all boats, with the ONS estimating 1.17 million vacancies in Finance & Insurance alone in December 2018, which, given that it is one of our core business areas at Cedar, was something of which we were well aware.
Of course, when we fast forward to the present, or at least as close as we can get from the data available, the phrase ‘off the cliff” is, unarguably, the only way to describe what has happened, as shown in the ONS stats from Mar-May 2020 in Fig 2 below.
Figure 2 (Source: ONS)
The ONS works with Adzuna, the job-aggregator, to provide a weekly update on job vacancies for the UK. The Adzuna study is based on an impressive, ongoing study of jobs across 16 different nations, looking at, literally, millions of vacancies.
Their analysis suggests that the number of job vacancies as a whole is some 60% down in the UK from March to early May this year. Some of the mainstream press have chosen, perhaps unsurprisingly, to focus on the worst possible interpretations of these data. This, in our opinion, does not help anyone. However, the marketing team at Cedar is extremely well connected to the media and has had a number of off-the-record conversations with senior personnel at a range of major job-boards and publishers. The broad consensus is that this 60% decline from pre-Covid levels of job advertising is continuing, although in some areas (IT and construction in particular) this has improved to ‘only’ 50%. Certainly, for the key sectors in which we at Cedar operate (finance, procurement, transformation and public sector), the situation at present is as Adzuna describes it, but – and it’s a very big but – the most recent figures from the KMPG/REC/Markit report for June show what we are all desperate to see – an uptick in the levels of recruitment from May (see Fig 3 below) for both perm and temp vacancies.
Figure 3 (Source: KPMG/REC Markit report for June 2020)
The calamitous plunge from March to May shows just how mad and bad things are compared to the so-called Great Recession of 2007-09. The slight easing of the decline in June, as the governments across the UK started, with varying enthusiasm, to ease the population out of lockdown gives us cause for hope.
Competition for jobs is also growing, both between regions and sectors. CV Library’s study in May this year suggests that the average number of applications per job across the UK was 29, with far greater numbers for the major cities, ranging from 42 in London and 45 in Birmingham to 24 in Aberdeen and Nottingham. Across sectors, there was even greater variation, from around eight apps/job in Education to 73 in Customer Services and 87 in Administration.
That said, job-board figures for applications can be notoriously unreliable, invariably displaying a far higher number of apps leaving the job-board than actually arrive on the recruiter’s own website. A study conducted by recruitment marketing experts thePotentMix for a major university showed that the number of clicks leaving a job-board can be as many as four times higher than the number actually hitting a job on an employer’s website, with, this research suggests, an overall ratio of c. 50% of what a job-board claims actually arriving on an employer’s website’s job page.
Of course, we need to tread carefully when job-boards mark their own homework. One of the biggest dangers of using their data is that there is a considerable degree of duplication, caused by recruitment agencies advertising the same job several times over (we’ve seen instances of over a dozen agencies all advertising the same job). The ONS reports that Adzuna filters out such duplication. Having checked this with Adzuna we know that they probably do catch the majority, but there will undoubtedly be some that slip through the net.
No matter how you slice and dice the figures, it is clear that once furlough is wound up, even without a second wave of the virus there is going to be an enormous spike in unemployment. As job losses explode, the market will become even more candidate-rich, with some real talent, out of work through no fault of their own, available for employers who wish to avail themselves of it. Hopefully, the trend seen in June should continue so long as the virus remains suppressed, with only occasional, localised outbreaks.
The REC’s latest JobsOutlook survey found that employers’ confidence in making hiring and investment decisions rose to a net level of +4 in the first half of July. This was up from net: -9 in June, when things were already turning and indicates that on balance, employers think the outlook has improved from the previous month.
By contrast, employers remain gloomy about the wider economy with confidence levels at net: -40, although they are rising from month to month.
If (and it is a fingers/toes/everything crossed if) a vaccine is announced, then public and business sentiment will, I believe, change overnight. But if we don’t get a vaccine and there is a serious second wave, then who knows where the job market is going…
Recruitment industry bodies, including the REC (Recruitment Employers’ Confederation) and APSCo (Association of Professional Staffing Companies), can, and do, try to help our industry, providing advice, data, webinars, etc. However, and this may come as a surprise to some recruiters, I suspect none of the industry’s clients and candidates gives a you know what about this. Faced with massive worries about whether they will have a business to run or a job to return to, then just like those baby birds with their insatiable demands, employers and candidates are going to want recruiters to cut to the chase, up their game and deliver an even better service, more quickly and efficiently than ever before.