On May 5 2022, The Bank of England warned that it expects GDP to fall by 1% in Q4 2022 and a further 0.25% over 2023. Meanwhile, inflation will reach between 7-10%, far exceeding the BoE’s 2% target.
Traditionally, such news would be dire for the labour market and consequently recruitment, as downturns typically result in:
However, a unique set of circumstances just may soften the blow. That's the take from the expert panel at our recent recruitment dinner:
The conversation centred on four key trends across the economy.
While the Bank has forecast an increase in unemployment, it's less than would be expected for the forecast conditions. This is due to a demand for local labour to fill the gap left by EU citizens who can no longer work in the UK following Brexit. Data from the ONS shows that this isn't just limited to low-income groups but distributed across the board.
A mantra of the current government has been that it will transform the UK into a high-wage, high-skill economy. The repositioning and skills training needed to achieve this would provide a boost for recruiters. However, such a change could take generations making this more of a long-term benefit to the industry.
The number of vacancies recorded over the last year increased by 112.5%, according to the ONS.
Some attribute this to 'COVID-19 catch up,' others to structural change. The answer is most likely a combination of both.
COVID-19 catch up is the phenomenon of companies and candidates that didn’t move for two years springing into action.
Various surveys suggest that 74% of people felt their job prospects were constrained by the pandemic, and 36% delayed resigning due to COVID-19 uncertainty.
Meanwhile, research from the Bright Network found that graduate confidence in finding a job has returned to pre-COVID-19 levels of 60%, having dropped to 30% during the pandemic.
The resulting release in COVID-19 inertia will have undoubtedly driven labour movement over the last year.
There's also an argument that overarching structural changes to UK business (some COVID-19-related, some not) are a catalyst for recruitment.
The pandemic has accelerated companies’ digital transformation plans, including technology to work from home. This has accelerated existing growth in technology recruitment.
The pandemic has increased private equity (PE) interest in recruitment businesses serving life sciences, technology, and digital transformation. Unrelated to the pandemic, PE is also seeking recruitment specialists who can serve the relatively new and fast-growing ESG and renewables sectors.
After a decade of talk, companies are finally acting on inclusion and diversity. Candidates are actively seeking employers with strong credentials in this area. Again, this calls for new specialisms within the recruitment sector.
Research from Bright Network reveals a gender gap between starting salary expectations – women expect an average of £25K whereas men expect £29K. There is a similar disparity between state and privately educated candidates. There's clearly a role for the recruitment industry to encourage wage equality.
The pandemic has permanently shifted attitudes in terms of when and where people are willing to work: candidates are seeking both hybrid and flexible working. Moreover, they're willing to move jobs to find it. For some groups, such as graduates, this is more important than pay.
Traditional career patterns are changing. Generation Z, for example, regards the first three years of working life as an experiment before specialising. Added to this, many don’t feel that they have the skills to enter the working world. Increasingly, recruiters are helping fill this gap with 'train-and-deploy models'.
The post-COVID-19 market has been buoyant and exciting for recruiters. However, they cannot rely on this alone to combat a potential recession. Companies that implement innovative solutions and business models based on changing structural demands will come out stronger and more competitive when the market eventually settles down.