It’s no secret that the UK is navigating its way through a perfect storm of economic turmoil at a national level, with a cost-of-living crisis and skills shortages that are impacting a variety of sectors. The latest edition of our Recruitment Trends Snapshot data — provided by Bullhorn — reflects these growing challenges and reveals some interesting findings that highlight insights into the wider domestic recruitment market.
Skills Shortages Impact Continues
The aforementioned skills shortages have impacted business in the UK and beyond for a number of years, but with the after-effects of Brexit and the pandemic looming, issues are becoming more acute. The lack of available skills spans all sectors, but some, like aviation, IT and finance, seem to be faring worse than others.
The lack of available permanent skills is highlighted in the growing demand for contractor roles noted in October, with statistics showing vacancies are up 3% month on month and 6% when compared to the same period in 2019.
And it’s not only demand for contract professionals that are rising — rates are too. In October 2022, staffing firms reported a 7% increase in contract revenue when compared to September, while annual comparisons showed a 14% uptick in October. The largest increase was noted when compared to pre-Covid levels, with sales up 48% since October 2019.
Permanent Market Turmoil
Within the permanent recruitment market there has been a level of volatility that can only be attributed to wider uncertainty in the UK. The market is mixed; while vacancies are down 6% when compared to October 2021, month-on-month data suggests that recruitment increased by 5% in October. Much of this growth can be tied to the decline noted in September due to the period of national mourning and from the additional bank holiday.
When compared to pre-Covid levels, however, the data shows a 24% decline in the number of jobs added between October 2019 and October 2022, suggesting that the recruitment slowdown experienced in the UK since the summer period is continuing. However, day-by-day comparisons of permanent placements across October indicate that we may potentially be over the worst, with a 16% increase in the second half of the month. This translated into a 22% uplift in permanent sales revenue for recruitment firms and aligns with suggestions that Jeremy Hunt’s arrival as Chancellor has calmed many fears in the market that were kicked up in early autumn.
Other findings from the data revealed that interview numbers remained relatively stable throughout October, down just 1% in the last two weeks of the month when compared to the first two. With vacancies also dropping, this dip is to be expected and suggests that November’s placement figures will also likely remain low.
A Difficult Q4
With contractor costs inflated above the rates of demand, the data shows that the costs of employing contractors are increasing. A variety of factors is behind the growth in demand, with firms struggling to source permanent skills across the board. Many organizations are also choosing to revaluate their permanent headcounts, most likely due to uncertainty over the economy in the coming years. However, others are seeking skills for more positive reasons, such as launching projects or products in new jurisdictions.
While the uncertainty in the market remains and employers continue to feel the effects of skills shortages, contractors will still be heavily relied on, and their rates will reflect this. Brexit and Covid have left talent in short supply, and temporary staff provide huge value in filling those gaps. There is a continued reliance on these groups in a complex and unpredictable market where fewer organizations are feeling confident enough to increase their permanent headcounts. The uplift in contract sales revenue highlights that contractors can now claim higher fee levels as a result of the increased demand they’re experiencing. While rate increases have been anticipated due to the cost-of-living crisis, the pre-Covid comparisons show this trend is being driven by more than just the economy.
As 2023 nears with skills shortages still prevalent despite the economic uncertainty, we can expect to see this demand for contractors continue to grow.