Why the labor market is still strong despite the economic turmoil

As we come to the end of what I have described as a year of four very different quarters, it’s a prime time to step back and reflect on the last few months. It’s been a tough time for the recruitment market. Skills shortages continue to prevail in a number of specialisms, despite falling vacancies. Economic uncertainty has led to some employers becoming overly cautious over permanent hiring. Strikes continued to impact the public sector and, inadvertently, private sector employees caught up in commuting chaos.

Focusing on Successes

However, it’s also been a time of successes for the staffing sector. From the point of view of APSCo’s Public Policy team, 2023 has seen a number of lobbying wins that will only help strengthen the labor market. The Off-Payroll set-off announced in the Autumn Statement is one prime example. Having called for this measure to be introduced, we were pleased that a financial safety net would finally be in place for our members.

Having also been involved in the initial consultation around the topic, we also welcomed the announcement that rolled up holiday pay will be legalized for agency workers including umbrella workers. Our policy team has highlighted for years that rolled-up holiday pay is necessary and will protect agency and umbrella workers.

These are just a few examples of the wins for APSCo, its members and the recruitment market over the last year, and we will continue to act as the leading voice for the professional staffing sector in policy decisions. As we enter a general election year, we have no doubt that further legislative changes will be raised in our conversations with MPs and backbenchers.

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Recruiters Still Needed

Of course, we can’t ignore the fact that vacancies have been falling across the UK, with data from the Office for National Statistics showing monthly declines for much of 2023. However, it’s important to look at this data in the broader context of the events of the last few years. We experienced unusually high recruitment levels for a sustained period post pandemic, and a decline was inevitable at some point.

Despite this, though, many sectors are still reporting skills shortages. It may seem like an unusual situation, but it is possible that we are seeing a level of backfilling of roles that have been difficult to fill. In fact, our recent Recruitment Trends statistics suggest that the number of placements has been increasing.

The data — provided by the global leader in software for the staffing industry, Bullhorn — revealed that while new vacancies are dropping, with permanent roles down 43% last month on pre-Covid levels recorded in November 2019, placements are rising.

Since November 2019, the number of people placed in a new job has increased 7%. Compared to 2018, placements are up 11%, with figures increasing 41% since November 2017. This suggests that the decline in vacancies is demonstrative of firms taking longer to fill roles and reigning in new jobs as a result.

Looking Ahead

The new year is looking like it will be another period of uncertainty to some degree, but with demand for highly skilled professionals still high and skills shortages prevalent in a number of sectors, there are pockets of opportunities for recruiters to capitalize on. What I do expect that we’ll see, though, is that the most successful firms are those that refocus their attentions on client audiences.

Having spent the last few years very much focused on candidate engagement while new roles were aplenty, a vast proportion of the staffing sector have neglected their business-to-business skills, at least to some extent. This is evident when we look at the strengths of those who joined the profession on the wave of the Great Resignation.

I’ve had many conversations with recruitment business leaders who have acknowledged that they have teams with little business-to-business experience. This will need to change in the coming months if firms are to get growth plans back on track.

The staffing sector may be facing an uphill battle next year, but it’s one I am confident we can win.

Ann Swain

Ann Swain
Ann Swain is global CEO of APSCo.

Ann Swain

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