Is the UK jobs market defying economic reality?

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As we wrapped up Q1 2023 we were seeing conflicting reports in the UK recruitment sector, with some saying vacancies are rising, while others are reporting that hiring is slowing down. 

It leaves us asking “what’s next for the UK jobs market” and if the current economic “tight spot” we find ourselves in is cause for concern?

The general feeling we get from our clients is that there is a moderate amount of caution in the face of economic uncertainty, however, it is not yet creating any significant slowdown in their hiring needs. 

Most of the conversations we have with those at the director and senior exec level it is very much a case of a keep on keeping on and business as usual.

Is the UK heading for recession?

Whilst the UK economy showed zero growth in Q4 of 2022, this year is shaping up to be an even trickier one to gauge. 

Recent figures released by the ONS show our economy grew by 0.3% in January 23, whilst positive, the data also showed a drop in output in both the manufacturing and construction sectors.

Scratch the surface and the numbers suggest our economy is still on some pretty unstable ground.

Households are continuing to wrestle with double-digit inflation, and whilst we seem to be doing just enough to avoid entering a recession, it feels like we are teetering on the brink, and who knows which way we will fall?

The NIESR recently forecast that the UK will “swerve a technical recession” and avoid two or more quarters of falling gross domestic product in a row. 

The IMF paint a far more gloomy picture that will see our economy “slam into reverse this year as the cost-of-living crisis hits households hard” and we’ll potentially see the worst performance of the G7 nations.

We might not officially be in recession but maybe we are in what some in our sector have dubbed an “unconventional recession” whereby the reality is different to the numbers (and Conservative Party spin)?

What would a recession mean for the UK recruitment industry? 

It is a common adage in our industry that £1 in every £20 that’s contributed to our economy is created by the work of the recruitment sector. 

According to our colleagues at the REC, search firms; “increase UK productivity by £7.7 billion each year by using their expertise to get people into the right jobs”.

It’s a given that unemployment will rise during a recession. Businesses will rein in spending over fears our finances will be knocked by a decline in demand. 

However, that is definitely not something we currently see here at Barron Williams. Clients are optimistic. Demand for senior execs is running hot at the moment and showing no signs of slowing down.

As an industry, we, like many, have a complex relationship with the economy that can be tricky to predict. 

Many of the macro trends and economic issues that impact heavily on other sectors, will present themselves in the form of different challenges for us. 

Of course, as it does with all, the economy shapes our sector in many ways. But what can often be negative in another sector can present itself as an opportunity for search firms. 

The current climate certainly casts a veil of ambiguity over talent acquisition, however, a well-networked and agile recruitment partner can still guarantee clients a commitment to put talented passive individuals in the right roles. 

What is the impact of a low rate of unemployment?

The current low rate of unemployment in the UK is generally perceived as a good thing. However, in recruitment, it can bring significant challenges. 

Do we have fewer candidates looking for roles and fewer companies hiring?

The current level of employment is currently sitting just above the 75% mark, so you would think that would be the case, but it really doesn’t paint the full picture.

For a starter, skills shortages still exist in many specialist sectors. However, this is where a specialist recruiter can really earn their stripes. 

We can add the most value by addressing those senior-level talent gaps and finding the passive people that are not actively searching. 

Applying a bespoke search and selection process will identify, attract, screen, shortlist, interview, select, hire, and onboard top talent.

If we do hit the buffers this year and enter recession or see a further slump, then of course that could all change in an instant. 

The situation could swing the other way but we know that as a business we’re geared up for whatever challenge we face. 

For the bigger recruitment firms, it can be like turning an oil tanker though! 

Low or high levels of employment, small and agile firms like Barron Williams add value for clients to ensure the relationship is a strong and long-lasting one, in the peaks and troughs.

Are shifting work patterns to blame?

The way we want to work has also radically shifted at the senior exec level over the last decade or so. 

The gig economy continues to evolve, self-employment is increasing and contract work means as an industry we need to be adaptable to new labour models.

Post-pandemic, the traditional 9-till-5-5-day week is even under the microscope. Flexi-time, remote working, 4-day weeks, etc are now more prevalent than ever.

The shift to remote working is one where many have had a change of heart though. 

Most of the clients and candidates we speak to are happy to be back in the office but many are still happy to work from home a day or two a week too.

The big impact here for us is more of a note of candidate caution though. 

Many are still holding loyalty to the organisations that looked after them during the pandemic. 

Combine that with economic uncertainty, and that talent is reluctant to move. Or unwilling to remove due to the flexibility of remote working in their current role.

To make that next quality hire we have to be prepared to roll our sleeves up, put in the hard yards and move quickly to secure the right candidates.

Can you afford to hire the best?

A shallow talent pool is putting increasing pressure on companies when it comes to remuneration. 

Those hiring might have to break wage structures or get more creative with benefits to tempt. Those looking to retain their best people are having to counter. Hard.

The current climate is creating upward pressure and bidding wars at final offer are not uncommon.

The current cost of living crisis and high inflation are often the elephants in the room. 

Demand for talent is currently outstripping supply and high inflation is only exacerbating the issue.

Concerns over the cost of living crisis translate into good candidates often only willing to consider leaving their current role if they can secure a bumper pay rise.

Simply breaking wage structures is not realistic (and rightly so) for many clients, so things like culture and flexible working to promote a better work-life balance become critical to retention or attraction.

With inflation running high and some organisations reluctant to loosen the purse strings, senior execs might look to boost their salary by changing roles.

We are all feeling financial pressure, but we would still encourage candidates to play the long game. 

Don’t just jump for the salary increase. Make sure the move if right for wider reasons.

Making a rash move now for a 15% rise now might feel like the right call financially. However, we would always advise that you think of the big picture. 

Of course, a pay rise is never a bad thing, but whilst the grass might be greener, is the ground firm and stable? 

This is often amplified at the senior exec level, so think about how the move sits with your career plan. 

Also, ask yourself is this where I want to be when times are tough?

The impact of economic uncertainty on Barron Williams

In the current economic climate, some recruitment firms might look to diversify to ensure growth (or at least not slip into decline). 

At Barron Williams that is not a road we feel (at this moment in time) we need to go down though. 

Our focus on strategic search and selection at the management and exec levels, combined with client-focused service, means we are best placed to locate and place talent. We’ve worked hard to build a strong candidate brand USP!

Our model is designed so that we are flexible and open to taking on more complex client demands and speaking to candidates who are not actively searching for a new role.

Brexit and Covid have both impacted the economy – and Brexit continues to do so. The UK’s nonsensical act of self-harm has affected many of our clients – directly and indirectly.

Of course, pragmatism has kicked in. But how much time and energy and cost has been wasted for zero economic growth?

The end result was always inevitable – a reduction in our economy and a number of tricky years ahead.

In order to thrive in such an economic miasma, Barron Williams must be flexible and continue to fine-tune our processes to meet the needs and demands of our clients and candidates.

The fact we are openly talking about this on this platform illustrates we are in a strong position to confidently deal with the ups and downs of the UK economy and an ever-shifting jobs market.

Our industry is often a reliable barometer for economic uncertainty and an impending recession. As a single firm, we may be untypical but, at the moment, we are not seeing the tell-tale signs. 

No hiring freezes, in fact, quite the opposite. Clients are active and we are not having any conversations about saving costs. Redundancy rates are still relatively low.

If we had to sum up our experience of the current UK jobs market, the phrase “resolutely optimistic” is a good fit. 

The feeling we get is that most of our clients are keen to hold on to or acquire the talent needed to support growth when we start to see an upturn in the UK economy.

As Neil Carberry, Chief Executive of the REC said recently:

“Employers that treat recruitment as a priority issue because of the value it adds unlock competitive advantage. Bringing in the best talent boosts productivity – especially where organisations work with recruitment experts. Companies wouldn’t go to court without the best lawyers – they shouldn’t hire without the best recruitment and staffing service.”

So, if you’re looking to work with a team dedicated to helping you find the right people to fulfil those crucial roles for your organisation, then please use our Client Upload Form or call us today.

If you’re looking to find or apply for a new role, then please feel free to Upload Your CV or call us for an exploratory conversation.

And if you’re not already, please don’t forget to follow us on LinkedIn and Twitter.

Barron Williams

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