Prospects for the SW employment market
Recent figures on unemployment in the South West make for difficult reading. The latest shows unemployment in the South West at 176,000 for the three months from January to March this year, or 6.6 per cent. This is up from 5.5per cent in July to September last year. During the recession, the number of vacancies advertised fell to around a third of previous levels.
Our experience as a recruitment consultancy supports these trends as we have experienced a decrease in assignments and an increase in candidates looking for work.
Despite the increase in the availability of candidates, underlying structural skills shortages remain, due largely to the make-up of the local economy. This means that in certain industries, the weak jobs market has not necessarily made it easier to recruit. For companies seeking specialist chartered accountants, engineers or digital marketers, for example, it is as difficult to find good quality people as it was in the boom years. The long period of economic growth experienced before the crash was masking problems in the labour market, with a shift towards higher skilled jobs and sharply falling demand for people with few or no qualifications.
So what are the prospects for the local employment market in the near future?
A GDP growth of around 2.5-3 per cent is needed before there is any significant impact on the recruitment market. Only last week, the growth forecast for the UK for the rest of the year was downgraded by the IMF to 1.5 per cent due to ‘unexpected weaknesses in the economy’. At the earliest, we will see growth levels of 2.5 per cent next year, and more likely late next year.
The Government’s economic plans rely on growth in the private sector to create jobs at a rate which will offset public sector redundancies. But it expects this at a time of higher taxes, increased fuel costs and widespread spending cuts.
Confidence among local businesses is beginning to return, but remains low overall and hiring decisions are being made cautiously. Before the recession, companies may have interviewed a candidate once or twice and the whole process may have lasted a few weeks. Now there will be third or fourth interviews, more testing and a longer time scale as companies are anxious to not make expensive mistakes. Candidates are also more wary – those who are employed are more reluctant to change jobs, no-one wants to be ‘last in and first out’. The reluctance to change jobs means less fluidity in the market and therefore less opportunity for job seekers.
There is also a mismatch in the skills most in demand in the private sector and those being released from the public sector. As a recruitment business, our clients are asking us for salespeople, marketing specialists and software developers. This demand doesn’t match the supply of CVs we are receiving from people leaving public sector organisations. Almost 70,000 people across the South West have spent at least a decade continuously on out-of-work benefits, so a huge challenge exists to get these people back in to employment at a time when specialist skills are most in demand and job creation is weak.
So when growth does finally recover, can we expect the recruitment market to return to what it was like say 3 or 4 years ago pre-recession? In a word, no. The changes taking place in the recruitment market are not just due to the global economic slowdown. The expectations of the younger generation, changes in technology enabling greater flexible working and the very nature of jobs themselves are changing the recruitment landscape permanently. The jobs that current university students might apply for didn’t even exist five years ago – the internet and more specifically social media, have begun and are continuing to shape and alter the landscape we all work in. The expectations that people have of the job market are changing. Technology means that we can now transfer calls between geographical locations with the customer on the line never knowing, and e-mails can be sent and received from anywhere. As the need to be at a fixed office location to perform a role lessens, the expectation for flexible working is increasing. There is also evidence that employers are utilising more flexible working practices – in the recession we saw more wage freezes, reduced working hours and voluntary pay cuts to avoid redundancies where possible.
Ten years ago a survey of 18-24 year olds found that 17per cent wanted to be self-employed or run their own business. When the survey was repeated recently, that figure had increased to 83per cent. This is a significant change in attitude and aspiration. The South West has a strong and vibrant small business community and culture of entrepreneurship. When people have relocated to live where they want to, but have not found the job exists for them to do when they get there, many have chosen to start their own business or become self-employed. More wealth is created by people and brands than by capital investment, so if we can support and encourage this local entrepreneurial culture then we stand to gain in the longer term far more than simply trying to attract more big companies to come or stay in the area. This is an important message to those responsible for economic growth and regeneration.