What Does an Employed Recession Mean for Recruitment?

Concerns around the economic climate may be growing, but all signs are pointing to a relatively stable hiring market at the moment, even though we have seen a slowdown in hiring. Data provided by Bullhorn, a global leader in software for the staffing industry, revealed an expected seasonal decline in hiring towards the end of 2022. Year-to-year permanent jobs also fell by 15% in December compared to the same period in 2021, while contract vacancies recorded a sharper fall of 22%.

This decline isn’t, however, a contraction of the market. When we consider the data in the broader context of the highs of the last year, it is instead a return to more normality. We can’t forget that jobs have remained at historically high levels, peaking at 1.3 million between March-May 2022, according to Office for National Statistics (ONS) figures. The increase in the number of part-time self-employed people from September-November 2022 is also a positive sign for the staffing sector and is a broad indication of employers turning to the flexible workforce to access the skills they desperately need and alleviate some of their skill gaps. Indeed, the growth of the flexible workforce will be key to economic growth in 2023 with the return of the over-50s also providing a welcome boost.

Competition for Talent

What is of concern, though, is the movement of permanent salaries, which when comparing December year-on-year figures reveals a fall of 6%. With a cost-of-living crisis gripping the UK, this fall in remuneration will cause employers to struggle to compete for talent if they cannot offer the financial incentives that are expected. For staffing companies, this will create a more challenging environment that will see their consultancy experience increasingly relied on as businesses attempt to find new ways to attract candidates without breaking the bank.

This will be more prevalent in the tight labor market we’re continuing to see. We’re facing an employed recession where, for once, jobs remain largely untouched (with the exception of the likes of big tech firms, who have admitted to over-hiring in the last year). Acute skill shortages persist across many sectors of the UK economy — the increase in migration of non-EU workers has not been sufficient to plug the post-Brexit shortfall — particularly in healthcare and education, which face a growing level of unrest and disruption.

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Striking a Deal

The recent nurses’ strike, a first for the Royal College of Nursing (RCN), is symptomatic of the broader skills challenges across healthcare and the public sector in general. Workers have had to deal with a double whammy of increasing workloads and a cost-of-living crisis that has become unbearably difficult. The confirmation of further walkouts by nurses in February 2023 is not good news, and we could yet see more action if a pay deal isn’t agreed. Meanwhile, spending on costly agency workers will make more of a dent in finances for healthcare.

The education sector is in a similar predicament. Skill shortages and the cost-of-living crisis have made it equally difficult for schools to find the teachers they need. Apart from the impact on pupils, the sector has been beset with a rise in staff absenteeism not only due to Covid-19 but also a rise in mental health issues and burnout. Schools have had to turn to temporary supply teachers to plug the gaps, adding to staffing costs at a time when budgets are already stretched. A talent exodus could be on the cards unless the government intervenes quickly.

The unrest in the public sector isn’t a problem that will go away easily or quickly, but APSCo believes that there needs to be a fundamental rethink around recruitment processes across education and healthcare. The difficulties around getting on NHS frameworks means many firms able to assist with recruitment are unable to. Across education, a more cost-effective and sustainable route to sourcing supply teachers that utilizes the knowledge and connections of recruiters is also needed.

There may be a lot of uncertainty for the UK economy at the moment, but for the staffing sector, now is a good time for the best recruiters to really shine.

Ann Swain

Ann Swain
Ann Swain is global CEO of APSCo.

Ann Swain

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