Career advice, insights & tips for HR professionals
The UK HR market so far this year 27/06/2012
Jemma Rawlins discusses the current HR recruitment market by region, compares activity levels in 2011 and outlines her expectations for the rest of the year.
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- What factors influenced the London marketplace?
- The south - candidate volume increasing
- The Midlands and North
What factors influenced the London marketplace?
The activity trends of the HR recruitment market in London can be split into three distinct periods during 2011.
In the first quarter, market conditions continued in a similar vein to those of the last quarter of 2010. While clients and candidates were very active, the market was still experiencing a marked slowdown from the extraordinarily high levels of recruitment during the first half of 2010. Nevertheless, in the first quarter of 2011 there was a general air of optimism that things would pick up in the summer months.
The expected increase in activity did not materialise in quarters two and three. In fact, the opposite happened as there was not just a seasonal decline in activity but a significant decrease, which was particularly noticeable in the financial services sector. As ever, in-house recruitment, graduate recruitment and learning and development were the first areas to suffer.
HR is often the first business function to feel the effects of a downturn. Following the general feeling that the market had slowed during the summer months, the situation became more severe in quarter four as many clients reduced headcounts across all of their functions. Again, the financial services sector suffered the most; and, though it was not affected as severely during 2011, the commerce and industry sector also experienced a slowdown.
The introduction of the Agency Workers Regulation (AWR) had an impact on the market in the latter stages of the year. Many interim candidates converted to permanent roles, and day rate interims moved into fixed-term contracts. During this time, the interim market was not especially buoyant, but it had not yet been impacted as heavily as the permanent marketplace.
It goes without saying that the public sector marketplace struggled throughout 2011 and we expect this trend will continue in 2012.
The south - candidate volume increasing
Although we experienced a steady increase in HR recruitment activity in 2010 compared to the previous year, 2011 was a busier and more reassuring period overall.
In the first few months of 2011, employers in the permanent market were still being very cautious, making sure job applicants had every skill they were looking for before offering them a position. In the interim market, the number of vacancies was increasing particularly within the recruitment and reward space and day rates were also starting to rise. The most active sectors were IT, retail and fast-moving consumer goods (FMCG). However, in the permanent sphere, we had some clients delaying processes, putting roles on hold and using agencies for additional candidates, having exhausted the market through their own in-house recruitment teams.
We typically expect a lull in recruitment during the peak holiday season of summer, but activity was buoyant. Employers were recruiting for senior roles particularly within the SME sector, and significantly within blue chip IT and telecoms businesses. Salary levels were beginning to increase, and clients were following through on processes. As a whole, the recruitment market seemed much more positive.
Similar to 2010, there was an increase in HR recruitment across retail and distribution towards the end of the year as consumer confidence began to grow again. This increase expanded into the FMCG market, largely due to the fact that the companies surviving the last two years were now operating in a more cost-efficient culture, having implemented more efficient management models. We witnessed significant cuts in headcount and pay in the manufacturing and engineering sectors during 2009 and 2010, but recent recruitment trends indicate that these sectors are beginning to prosper again. This can be attributed to the fact that the UK still has a significant presence in specialist technical manufacturing and engineering. With the continued economic recovery and increased global demand for UK-produced goods, competition for talent is now fierce.
During 2011, Hudson clients benefited from value-added services like salary surveys, benchmark data, invitations to events and market analysis, which helped them with recruitment plans and to present internal business cases supporting change.
In 2012, we’re seeing some great candidates coming into the market who are making their own moves for career progression, salary increases and new challenges. In general terms, the volumes of candidates remain high, evident in the number of applications coming through for each vacancy. Client adverts with specific brands and logos have also tempted the passive job seeker into the market.
The Midlands and North
The HR market in the Midlands has been through significant change over the last 12 months. One noteworthy trend has been the evolution of traditional HR roles into more specialised functions that are considered to be intrinsic to the commercial success of an organisation. In an environment where many employers are considering downsizing measures like site closures, mergers and relocations, it's clear that HR professionals are regarded as a vital resource.
There have been a significant number of redundancies in the Midlands region particularly in the manufacturing sector. There are still opportunities for projects, standalone roles and start-ups. Shared service strategies have become popular, where organisations utilise multiple skill sets from one service centre, thereby reducing costs and staffing numbers. Employers are also pursuing specialist HR fields like rewards and organisational development, which demonstrates a general aspiration to retain and develop internal talent by offering competitive benefits packages and investing in learning and development.
In such a candidate-rich market, starting salaries are undeniably being driven down across permanent and interim roles. Employers are also becoming increasingly particular about qualifications and sector similarities. Candidates who can demonstrate a mix of sector background will find the current market more accessible.
We expect to see significant growth in the financial services, retail and automotive sectors across the Midlands this year. There will be continued budget restraints for permanent positions in the public sector, but specialist projects will still command effective interims.
There were noticeable developments in the HR recruitment market in Scotland, including some trends carried over from 2010.
During the first quarter of 2011, the number of opportunities in the temporary and fixed-term contract markets increased, principally relating to mid-level HR and generalist positions. The trend was not necessarily related to the economic conditions, but these conditions were arguably a factor. The increase was perhaps more attributable to the ongoing need to provide interim cover, both planned (e.g. maternity and additional projects) and unplanned (e.g. long-term sick). The financial services sector was strongest in terms of hiring.
From quarter two onwards, there was a rise in the number of permanent opportunities. More sectors were recruiting, including FMCG and manufacturing, while growth was maintained across financial services. I
In some sectors we experienced extended hiring processes and a higher number of roles that were put on hold at the final stage of recruitment, mainly as a result of budgetary constraints or internal restructures.
In the second half of the year, candidates expressed concern over the lack of opportunities in the senior market specifically for £65,000+ salaries in the financial services sector. The impact of this shortfall in demand resulted in a higher number of senior level candidates compared to the previous year, when the senior market was more buoyant.
In 2011, there was a significant uplift in the demand for specialist roles, particularly around skills like organisational development and reward. There was a considerable shortage of candidates who were suitable for these specialist roles, though, both in the interim and permanent contract markets.
Unsurprisingly, the public sector continued to see a decline in hiring opportunities, a trend that will undoubtedly continue throughout 2012 as the sector faces further challenges as a result of spending constraints. With that said, it is expected that approved public sector projects will still require specialist HR interims.
We foresee the growth areas to be financial services, FMCG and renewables this year. We also anticipate that the demand for specialisms such as change management and reward should also continue into 2012.
Jemma Rawlins, associate director, Hudson HR
Jemma Rawlins is an associate director at Hudson HR.