We have entered an interesting time in the world of recruitment and business growth – and many hiring managers and business owners are left unsure of what’s to come. As an agency, we are in a unique position to advise and consult clients and candidates on what their options are.
The current data that we’ve been provided with has evidenced that we expect the market to slow down towards the end of this year, which has the potential to spill into Q1 of 2023. However, this shouldn’t be seen as a negative.
This market is showing different characteristics of recessions and hiring freezes of the past – where employers have typically put a freeze on hiring altogether, or cut back on contractors and freelancers to keep permanent staff.
This is being called a “Full Employment Recession” in the market. At present, no one has a gauge as to how long or deep this recession could be, but data has shown that there is still an appetite for talent – and we are seeing recruitment return to a similar pace that it was before the pandemic.
LinkedIn produced an insightful talent report on this, highlighting that “Between September 2021 and September 2022, hiring rates in the UK slowed by 11%. However, while hiring rates are slowing down, the unemployment rate remains near a 50-year low.”
Additionally, the need for contractors is higher and the demand for permanent staff is slowing.
APSCo produced an insightful report on this, which highlighted a 13% YoY increase in placements for contract staff since 2020, and a 3% increase for permanent staff.
Permanent workers are finding balance after a lot of unrest
Although we have left the unrest of Covid-19 behind, the domino effect rippled through the permanent market and left many individuals across the world needing to either start their careers from scratch, or find rhythm and balance after so much uncertainty.
Many permanent workers are reluctant to leave because of this, and instead are looking to invest their time into organisations that will enable them to build their experience and ultimately, regain the time that they lost both from a development and financial perspective.
Permanent workers are looking for more attractive packages and basic salaries
It’s important to note that the market we have known for the past 12-months is not considered “normal” by any standards. The demand for talent had outweighed the number of candidates available, leaving many with multiple offers on the table and higher salaries.
This gave candidates a unique opportunity to “call the shots” financially and request attractive packages that would guarantee longevity within an organisation – as well as an impressive uplift in basic salaries.
But, we are now entering a period where the market is “levelling out” and returning to pre-pandemic levels, salaries, and rates. This shift was inevitable, but the byproduct feels like a lull in the market – despite it not being so.
“Company leaders should think about ways to maintain the confidence of their workforce – clarity on business conditions, a realistic conversation about compensation and living costs, and thinking about how financial support or greater flexibility can help with other costs like commuting and childcare” – LinkedIn Talent Report
Contractors have demonstrated their ability to handle times of crisis – thus being best placed in this recession to service the demand
Although hiring freezes were set across permanent and contract staff during the pandemic, those who did hire contractors, saw how valuable this type of talent can be in times of crisis.
Contractors are now being called upon not only due to being able to deal with challenging situations, but also due to the ease of being able to hire on much shorter contracts. Both parties prefer this agreement – and for contract and freelance talent picking up and dropping projects is “the norm”.
What do our consultants say?
“In our space, the demand for perm candidates is still busy. There’s been a slight ease in recent weeks, but it hasn’t been too much of a significant shift as of yet, and salaries are still a big talking point – with good candidates still getting multiple offers.”Phil Smyth, Associate Director, Tax Division
“We have noticed a return to pre-pandemic levels of permanent hiring in Q4 so far, so again, definitely ‘normalisation’ on the horizon in the market. This shouldn’t be seen as a negative, in fact, it shows that we are achieving more balance across the market with exciting opportunities still available”Phil Westcott, Director, Finance Division
“Rates and salaries are definitely “cooling” in our space as a result of more candidates becoming available. This means the market is balancing out, and it’ll be interesting to see how this evolves as we come to the end of Q4” – Change and Transformation practice
Our prediction is that a flexible workforce is what could become the norm in months to come. Many organisations have already seen the fluidity of a flexible workforce, with a smaller percentage being perm (thus acting as the “core” of a team or organisation) and contractors filling in and taking on shorter or more intense projects to help retain budget, reduce recruitment times and in essence, run a more agile workforce.
“The definition of a flexible workforce continues to evolve as more people choose self-employment over traditional jobs. This type of workforce typically includes a mix of part-time employees, contingent workers, freelancers, independent contractors and gig workers. The work may be seasonal, project-based or contracted and is most often done remotely.” – Onespace
Businesses should also be focussing on retention as a key part of their recruitment strategy as we approach 2023. Although retention strategies are widely spoken about, they can easily “slip under the radar” if not managed effectively.
Permanent workers are here to stay – and the current market conditions have evidenced this. But, organisations should avoid complacency and invest heavily in the L&D of their current employees, as well as ensure that there are clear paths for progression and open communication on what that needs to look like on an individualised basis.
We are currently working with a number of organisations on their recruitment and retention strategies for 2023, to learn more about how we can consult you, get in touch with one of our specialists today.