Articles by Smart Recruit Online

CIPD Recruitment Outlook for 2019 – 6 month review

CIPD report

By Mark Stephens

 

The CIPD Recruitment Outlook for 2019 Report was published in December last year, so I am going to review it against the reality of what we know is happening in regards to UK recruitment 6 months on.

It might seem a little strange to review the labour outlook for 2019 just 6 months into the year, but assessing the predictions made last year halfway into 2019, gives us an idea of how accurate these reports and forecasts are. Plus it’s a great opportunity to reflect on the year to date and to forecast on what we can expect in the 6 months ahead.

Drive down rec costs

The CIPD report starts by summarising employment and unemployment statistics and the impact that this would have on inflation and average increases in rates of pay. The predicted rate of inflation was set at 2%, but has actually held fast at 1.9% since the start of the year.

Increases in basic rates of pay have increased slightly, with certain skills sets being affected more than others. Quite significantly in many cases.

Private sector pay rate increases have risen to 2.5% after holding fast at 2% since 2012, yet interestingly public sector pay increases have fallen slightly to just 1.1%. This is creating a wider gap between the two sectors that could yet have a significant impact on the labour market, as the public sector struggles to compete for the majority of in-demand skill sets.

Employers in manufacturing and production have the highest proportion of hard-to-fill vacancies (48%), compared with only 23% in public administration and defense.

The latest official data from the ONS shows that the number of unemployed per vacancy stands at a historic low of 1.6, which has trended down from 5.8 in Q4 of 2011

Recent surveys of HR professionals certainly confirm that recruitment of staff remains a serious challenge, and 32% of those surveyed confirmed that the retention of key people and in-demand skill sets are keeping business owners up at night.

With too few people to go around in many niche jobs, a significant increase in poaching staff from local rivals has been reported and is expected to continue.

In some geographic areas of particular low unemployment, such as Milton Keynes, (that continues to grow at a phenomenal rate), there are serious concerns over the impact that staff shortages will have as this drives-up pay rates and impacts the companies ability to operate competitively. In fact, over 55% of business owners said that they had increased salaries for in-demand roles within the last 12 months.

Adecco Group’s global CEO, Alain Dehaze, identified recruitment as ‘the deciding factor in the global scramble for prosperity’ in the recent Global Talent Competitiveness Index (GTCI) 2019 report. And he isn’t wrong, as any private sector business that is looking to expand will tell you, the recruitment of quality talent is key to effective growth.

However, it is the retention of staff that poses an equal challenge in the current market and it’s not just staff shortages that are affecting this. The growing number of millennials entering the workforce is having a big impact on attitudes towards staff retention, this is because a generation of entry-level talent thinks very differently in terms of what it is looking for and what it expects from its employer.

A rapid transition is taking place in what attracts younger talent, from ‘traditional – Brand’ to a ‘what’s in it for me – Culture’. We have a generation of people looking for instant gratification and that is impatient in its ambition to acquire this. Unfortunately, the demand for young talent and the low levels of unemployment are only accelerating this massive change in culture, because it has never been so easy for talented individuals to move jobs, in order to take significant career steps and make big improvements to salary.

Below is an extract from a recent survey by Reed.co.uk, which appears in their video about Rules of Attraction which clearly points to improved pay as the main motivator for people actually looking to move jobs. (taken across all job seeker demographics)

Not all millennials are money hungry individuals, although there is no denying the data supports our observations around moving jobs to increase pay. What we are also seeing in many employee surveys is the growing demand for better working environments with increased levels of support in regards to health and wellbeing.

The pool table and beer fridge are being replaced with health insurance, gym memberships, nutritional advice, a smoothie fridge, access to mental health advice and flexible working.

Data and incepts below provided by Reed.co.uk

 

Interestingly, the CIPD survey recorded a predicted reduction in recruitment growth in 2019 of around 20% against the previous year, and there was also an increase in the number of employers who indicated that they would be looking to decrease staffing levels. This, of course, is partly down to the confidence impact of Brexit and the uncertainty that brings to the markets.

In terms of company productivity, the report indicates that this is still only a middle-ranking priority for employers, which seems a little strange considering the impact that productivity has on growth and profitability. Ahead of this in terms of priorities, sits cost management and improvements to customer service, closely followed by a focus on growing market share.

Our own data, taken from more than 500 employers operating across all industry sectors and from more than 5,000 job postings, has shown an overall increase in recruitment activity in the first 6 months of 2019 against the previous year.

However, I asked a few of the leading Job boards to provide me with any YTD data that they could share. CV Library kindly provided me with a very interesting sample of data, which I have summarised below.

CV Library example

Data comparison is taken from  1st Jan – 30th May 2018 vs 1st Jan – 30th May 2019

General increases or decreases in job posting activity on the previous 6 or 12 months

Advertised jobs up by 3.5% year-on-year

Full breakdown by month:

20182019% change
January185,736195,432+ 5.2%
February160,963167,388+ 4%
March173,168178,720+ 3.2%
April168,302170,629+ 1.4%
May185,871192,742+ 3.7%

 

Public v Private Sector stats 

Data taken from 1st Jan – 30th May 2019 vs 1st Jan – 30th May 2018 – CV Library

Advertised jobs down 1.8% year-on-year

Applications to Public Sector jobs down 9.2% year-on-year

Average advertised salaries in the Public Sector up 12.8%

Full breakdown by month:

Public Sector jobs

20182019% change
January1,1451,052– 8.1%
February936878– 6.2%
March912908– 0.4%
April881902+ 2.4%
May886935+ 5.5%

 

Applications to Public Sector jobs

20182019% change
January21,21216,825– 20.7%
February17,66715,453– 12.5%
March18,56014,613– 21.3%
April12,71415,146+ 19.1%
May13,99914,334+ 2.4%

 

Public Sector salaries

20182019% change
January£30,179£38,839+ 28.7%
February£31,498£32,026+ 1.7%
March£31,353£37,758+ 20.4%
April£31,662£30,931– 2.3%
May£31,808£31,967+ 0.5%

 

Increases or decreases in wages 

Average advertised salaries up by 8.9% year-on-year

Full breakdown by month:

20182019% change
January£33,460£34,4975.2%
February£33,606£43,7554%
March£33,500£34,5293.2%
April£33,417£34,7971.4%
May£33,140£34,4863.7%

 

Most active sectors for candidates

Numbers refer to amount of active candidates per month

IndustryJan 2019Feb 2019March 2019April 2019May 2019Average
Construction351,696336,419359,698328,697325,261340,354
Administration289,680269,093296,479272,665268,239279,231
Engineering253,432241,075254,721241,536237,952245,743
Manufacturing/Surveying166,289150,322158,985149,454143,594153,729
Distribution147,463131,811147,842140,352137,523140,998
Accounting/Financial/Insurance126,249118,626129,142118,570114,701121,458
Sales115,267105,361120,846114,935113,849114,052

 

 

CV Library predictions for the 2nd half of 2019 or impact on a no-deal Brexit 

  • More candidates applying to jobs – we saw a spike in this area following our failure to depart the EU in March and this will only increase until there is more clarity around Brexit
  • Salaries will continue to rise – as competition intensifies, organisations have no choice but to push up pay in order to attract more candidates to their roles
  • Job numbers will increase – businesses remain confident in their hiring efforts and want to hire the right people to help grow their companies

 

Smart Recruit Online Summary

There appears to be no respite in the main recruitment challenges facing UK business for the remainder of this year and beyond. The predictions and observations made within the CIPD survey, on the whole, seem to be accurate and reflective of the current status quo.

Universities and Colleges appear to be struggling to keep up with the most in-demand skills sets and the change of pace in relation to new and emerging technologies. Therefore it is becoming ever more common for employers to look at their own internal training capabilities, in order to fast track ‘out of education’ entry-level staff and those with transferable skills and mold them into their talent of tomorrow.

Methods for improving the recruitment of staff remain very high on the agenda, with more and more pressure on recruitment service providers to deliver better solutions.

The professional agency market is possibly being supported by the current skills shortages and continues to deliver around 20% of all hires. However, high on most company’s agenda is a reduction in recruitment spend, with a reduction in agency spend at the top of their list.

More than 60% of all direct hires are still being generated from the top 10 leading job boards and we are still seeing slow but continued increases in the number of hires coming from PPC and programmatic solutions and channels on the previous 12 months.

Internal recruitment technology is seeing the most dramatic changes with innovation and the introduction of more AI and machine learning enabling internal teams to operate more efficiently.

Over 40% of companies indicated that they are looking to upgrade their recruitment technology within the next 12 months.

Traditional ATS and HR recruitment plugins are now being replaced by more intelligent and far more effective Talent Attraction Technology (TAT) solutions, that centralise everything but are agile enough to adapt to each individual business and recruiters’ specific needs and objectives.

The modern-day TAT system improves the user and candidate experience, removes duplication of effort, reduces administration time, encourages the recruiter to deliver a better applicant experience, adapts the screening process to each job, to ensure better hiring decisions are made and comes with a far more proactive support infrastructure that works in partnership with the internal recruiter or team.

These recruitment systems will play a vital role in making business more effective in both attraction and retention of staff and currently, provide a distinct advantage to those using them over and above the traditional ATS and HRS Recruitment module.

Overall, the CIPD Survey is an interesting read and provided a useful platform from which to review the year to date. Private sector recruitment activity is up by between 3-5% and some of this could be down to increased skills shortages and more companies having to spend money on external advertising. Public sector recruitment looks to be struggling, with pay gaps between private sector on the increase.

I predict that public sector recruitment is heading for an overhaul because archaic systems and insular processes that are keeping them in the dark ages, will have to give way to modern technology and much simpler and more modern application processes to stand any chance of competing for talent.

About the author

 

Mark Stephens has over 20 years of business management experience, across Sales, Marketing, Recruitment and Technology environments. Mark is a recent winner of several prestigious awards including the Chambers of Commerce award for innovation in business. He is a serial entrepreneur and is the founder of several companies including Smart Recruit Online and The HR & Recruitment Resource Library.

Mark has established a reputation for his passion and enthusiasm over twenty years working in the recruitment industry, both client and agency side. For the last ten years he has been researching the recruitment landscape from both a technology and people perspective. His insights into market trends are often used and quoted across the industry’s leading publications.

Mark also delivers keynote talks and training to recruitment teams in both public and private sector organisations, on writing better advertising copy, targeting passive candidates and understanding candidate behaviours online.

Connect with Mark Stephens on LinkedIn

 

Access the CIPD Annual Report here

CIPD report