The recruitment market and the economy more generally have had a lot of exogenous shocks over the last few years is, I can say without fear of contradiction, an understatement. Yet, despite all the gloom (and there is a lot of it about), despite the fears that once furlough was wound up the unemployment rate would rocket and despite the concerns many had about Brexit, the jobs market has defied expectations.
In accounting and finance – one of the core areas of strength for Cedar – we’ve seen a veritable boom in placements, especially in the recently-qualified market. With the easing of pandemic restrictions and continually improving market confidence, we have been posting record month after record month. But what does this mean for candidates and employers? How do they, from their differing vantage points, navigate and negotiate the job market as we move on into 2022?
Well, let’s start by looking at the broader economic picture. The most recent GDP update (from January 2022) shows that despite Covid causing the largest economic contraction in 300 years, and despite taking the biggest economic hit in the G7, Britain had the fastest growing economy in the G7 last year, boosting its GDP by 7.5%. That said, the UK ranks average within the G7, but, crucially, the Office of National Statistics (ONS) noted that Britain’s businesses and consumer confidence continue to be more robust than expected and remain above pre-pandemic levels.
As far as the wider recruitment market is concerned, the latest industry figures (REC/KPMG/Markit report, Jan 2022) show recruitment activity continuing to rise sharply at the start of this year, with a rapid fall in the overall supply of candidates being a notable feature, although this fall was not quite so precipitous as it had been last summer.
When we focus on accountancy and finance specifically, it is, by and large, all good news. Turnover in the UK accounting industry rose to £36.6bn in 2021, which was an increase of 15% on the 2020 figures and, according to the ONS, the largest on record for the sector. This is in line with the UK’s overall service sector which, including accounting, grew by 14.8% last year to £2.3tn. There was a slight downturn in accounting revenue (1.3%) in December last year, almost certainly due to the ramping up of restrictions in response to Omicron. However, it’s been full-steam ahead since then and, at the time of writing, the jobs market shows little sign of abating.
Let’s now drill down into some of the specifics of accountancy and finance. The Markit figures from January 2022, shown in the graph here, demonstrate the rapid bounce-back from the trough of the recession. More specifically, Markit identifies a number of key areas of candidate shortage: in perm roles, accountants, auditors, book-keepers, credit-controllers, estimators, finance, payroll, risk and taxation; while in the temp market it’s accountants, auditors, book-keepers, credit-controllers, finance, payroll and taxation. It is also important to consider the current uncertainty surrounding the Ukraine Market, it is important to assess the situation to see how it plays out.
As far as Cedar is concerned, our team working in the recently-qualified market has seen some interesting developments in the last few months. While there is lots of hiring, employers are getting much more choosy about candidates. Industry experience and, crucially, job-specific experience are key. Employers are far less likely to take a risk: they too want to escape the pain of the last few years as quickly as possible so they seek the best possible people to help them accelerate away from their competitors.
Then there is, of course, the WFH conundrum. On the one hand, surveys and our own substantial candidate-interviewing experience tell us that 90% of candidates won’t take a job if there is no flexibility on offer. Consequently, the majority of our clients are prepared to be flexible, up to an extent. Getting this balance right is going to be vital in 2022. Most employers want their people in for three days a week, but there is a (tiny) minority who are trying to insist on having staff in the office for all five days. I’m afraid that if that’s you, then you’ll struggle to recruit. Flexible working, in some form, is here to stay, especially when you bear in mind that some countries (including Scotland) are experimenting with four-day weeks.
Although WFH is now well-established, one thing which we thought would occur as a result of it has not happened to anything like the extent we thought it might. This is people moving further afield from London and taking on more international roles while still working from home. Although the latter is more common in sectors like fintech finance, our experience is that most people simply do not want a two-hour commute, even if it’s only for two days a week. Even though they know the cost of living is less, outside London, there is still a reluctance to leave the capital and its myriad attractions. Savvy employers recognise this and have already factored in cost-of-living increases, as well as providing, as they have for some time, a comprehensive array of non-pecuniary benefits such as wellness programmes, gym memberships and social events.
Nonetheless, the cost-of-living is an issue and it is closely aligned to another problem, that of salary expectations. With a continuing shortage of quality candidates, we’re seeing, for the first time in my experience, salary bandings rise across the board. Whereas a good, recently qualified candidate could previously expect £55K, it’s now £60K+. There may be a hard-landing coming here as people have increasingly inflated salary (and benefits) expectations, but it’s currently hard to call and we’ll see how it pans out over 2022.
On top of all this is the ongoing shortage of candidates. There was a bottleneck last September as furlough wound up and Cedar’s phones went red-hot with clients all seeking candidates ‘yesterday. ’This is plateauing now, but, for recruiters, separating the wheat from the chaff is a daily issue. With 200 or so recently qualifiers coming out of the Big Four every year, all, on paper, much the same, how do you find the real stars?
The answer, in my view, is simple. The best recruiters – those with established reputations like Cedar – are extremely proactive in the candidate market, meeting and assessing people over a coffee - or in any other, out-of-office environment where you can really get to know what makes an individual tick. This is not something that can be done by email or text. On top of that, we’re making more use of events and decreasing our use of job-boards, although the latter can still be valuable so long as you are prepared to craft a really appealing advert - something that many recruiters are, sadly, not good at doing.
Finally, we suspect that not all employers realise the extent of the challenges thrown up by the current jobs market. They know it’s both tough and fluid, they know they want the best possible candidates and they are prepared to pay for them, but some, often smaller, firms, still don’t get this, thinking they can pick someone good up on the cheap and then train them. As I implied above, it’s those candidates who can hit the proverbial ground running and, almost exactly, meet the client and person specification for the job, who are going to come out winners – as will their new employers.