The state of the hiring market

Looking at our hiring data from the last year, it’s clear that there have been significant trends, most notably — and perhaps unsurprisingly for regular readers — that businesses have struggled to source the skilled professionals they need to fill roles.

While the majority of firms have faced issues identifying and recruiting the skills they need to drive growth, the more worrying issue has been the divergence between vacancies and applications, with the former on the rise and the latter falling. This has made recruitment exceptionally challenging for many businesses, particularly those operating within some of the sectors outlined below.

IT and tech drop-off. Within the IT and technology industry we saw a sustained demand for skills in the first half of 2023; however, hiring activity appears to have dropped off since then. From January onwards, vacancies remained at around 18,000 per month, but the second half of the year saw these numbers fall by 42% with job numbers bottoming out in November. While much of this decline could be attributed to businesses reducing their hiring activity as the holidays approach, it is more likely a continuation of a trend noted in the summer, when vacancy numbers began to decline in response to wider economic indicators. Application figures have followed a similar path, with the number of professionals applying for positions in November 55% lower than it was in February. It should of course be noted that the industry as a whole is recovering from the impact of major layoffs, most notably among the FAANG companies, which is likely to have played its part on the overall nature of the hiring market.

Engineering talent gap widens. A similar trend has been noted within engineering — another industry plagued by skills shortages — where application numbers have declined by 49% throughout 2023. Demand for skills here remains strong, influenced by the net zero targets made earlier in the year, with the renewable and nuclear sectors driving much of the need for talent. Several ambitious megaprojects have been announced or launched over the past 12 months, and businesses will need to find methods to identify more skilled professionals who can help to deliver these schemes. The shortfall of STEM specialists is currently extremely high, and although vacancy numbers fell by 30% in 2023, it appears that the gap between supply and demand is potentially widening, which should be a cause for concern for employers.

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Construction firms pay challenges. Construction and building employers also faced recruitment challenges in 2023. The industry has faced a lack of talent for some time now, and while vacancy numbers fell by 42% in the last year, applications dropped by 55%, suggesting this sector is also becoming more challenging to recruit within. Interestingly, salaries have climbed by only 2% since the start of 2023, suggesting employers may need to do more to recruit the professionals they need, particularly in light of the wider financial climate.

Education skills shortages. Education and training is another area which has seen its skills gap expand significantly over the past 12 months. Vacancies have fallen by a relatively modest 8%; however, applications have fallen by 45%, suggesting businesses will face challenges sourcing the talent they need. Unlike construction, this field has responded by boosting salaries by 6% over the past year, no doubt influenced by the public sector pay rise announcement, suggesting that employers are willing and able to spend more to recruit effectively, which may play in their favor over the coming months.

While the recruitment market has created major challenges for businesses, we are now at a stage where vacancies are falling, largely in areas that have faced persistent skills shortages. And, given the falling application numbers and the broader lack of available talent across the entire market, this decline isn’t necessarily a negative reflection on the recruitment sector. It will be interesting to monitor how the market evolves over the coming months as we move into the new year and businesses look to step up recruitment activity once again.

Alex Fourlis

Alex Fourlis
Alex Fourlis is managing director at Broadbean Technology.

Alex Fourlis

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