Executive Comment
Insights on the market from the Vacancysoft CEO, James Chaplin
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Are HR vacancies set to surge?
The return of working from the office, is manifesting, especially in the larger companies, with a combination of carrot and stick now in effect. Refusniks who are successfully negotiating to retain their remote privileges are being told that only people based on site are likely to get bonuses and promotions, whilst others are starting to be counted in and out and disciplined if they are found to be working remotely too often.
Q3 shows a September slump
The countdown to the October 30 budget starts now. 3 months into power, and the priorities of this Government are becoming clear. The question is how to pay for these policies the Government want to implement. For context, the inflation busting public sector pay rises have already added 10BN to the budget, and there are likely to be more to follow. Without productivity linked reform, the danger is that this just results in inflationary pressure, at a time when the Government would be wanting interest rates to fall.
IT Development vacancies still 7% below 2023 levels
Historically, IT has been the disruptor. From Retail to Transportation, the integration of technology has meant that monopolistic incumbents have lost market share to new upstarts, who have carved out their own share of the market. As an example, imagine that 20 years ago, Black Cab drivers could expect to earn £100,000+ per annum. With Uber, the profession has been permanently changed.
Could Atom Valley put Manchester on the Global Manufacturing Map?
In the decade to 2020, the Greater Manchester economy grew by 39% from £53.89 billion to £78.7 billion and it has been one of the major UK city-regions driving job growth nationwide. With that, Manchester is the largest regional financial, professional, and business services hub outside of London, employing more than 280,000 people. With that in mind, the city has made a strategic gambit to attract international businesses, as part of a north-shoring strategy, where as a result, Spinningfield now has companies located there across Banking, Consulting, Insurance, Law and Technology, employing over 20,000 people overall.
ONS data shows contraction in vacancies
“It’s the economy, stupid.” And in that moment, the paradigm by which political discourse became viewed changed. Now with a new Labour Government in situ, the signs are for the most redistributive budget to be seen in many generations. In fact, given the fact New Labour mostly signed up to the tenets of the prior Conservative regime, you would have to go back to pre-Thatcher to understand how this Government seeks to govern.
July sees record vacancies in Life Sciences
After a protracted slowdown in the post pandemic period, the life sciences sector is finally springing back to life. July was the record month this year so far and the signs are positive looking forward. In terms of what had caused the lull, it is worth factoring that with the UK leaving the EU this had meant that the MHRA had to take over regulatory approvals for new trials, and this process has taken time to bed in.
London Law Firm’s continue to recruit
The transactional nature of the London Law Firms means that activity here acts as a good barometer into confidence in the economy. Increases in Law Firm hiring typically can be directly linked to greater demand for their services, either from the Banks, on the one hand, or the Real Estate sector on the other. Therefore the fact that over the last three months, vacancies have been higher this year, than in both 2022 and 2023, is a positive sign, reinforced by a general consensus that the UK economy is performing better than many anticipated, which is reflected in GBP strengthening.
Corporate Recruiters in Demand as hiring picks up
As the UK economy adjusts to a new equilibrium as a result of the change in Government, there have been positive signs of a rebounding in recruitment. Nonetheless, it is worth mentioning that a fair amount of the July hiring was due to vacancies being deferred from earlier in spring, as companies waited on the result of the election. Once the Labour Party was confirmed as having won, companies removed the hiring freeze and moved ahead with the vacancies they had planned for.
Defence Vacancies surge post election, what next?
Within a week of coming to power, Starmer committed to stand with Ukraine, for as long as it takes. As part of that he then committed to new package of artillery and brimstone missiles to be delivered shortly, as well as placing a new order for soviet era ammunition, to help bolster Ukraine’s defences. Hence, the bounce seen across the UK economy in July, was most pronounced in Aerospace & Defence, with vacancies rising month to month by over 40%, and hitting levels last seen in November last year.
July bounce for IT, but what about H2?
For everyone involved in IT recruitment, the burst of activity seen in July was a welcome relief, as vacancies ended up hitting levels not seen since Q1. Indeed, the final total for the month, was the third highest since April 2023. Nonetheless, the pragmatists will recognize that the general election being announced in May, resulted in many businesses deferring investment decisions, including hiring, until after the result, which had meant that Q2 was materially quieter than Q1. So the burst in July could just be the result of that pent up demand being recognized.
Is Real Estate about to Boom?
As soon as the General Election was called, it became clear that the second half of the year would see a surge in recruitment in House building. Therefore it is not a surprise that vacancies in Real Estate in July hit record levels. Whilst the Conservatives had tried to implement mandatory house building targets under Gove, such was the resistance from their core constituencies, it was soon dropped. For the Labour Party, they have no such constraint, and as a result, have reinstated the target, and increased it.
July vacancies hit record levels
The post-election bounce is real. When the vacancy volumes are analyzed by weekly totals, it is in July that the record total for the year has been posted. While this can be a function of the immediate post-election bounce, the wider economic news for the UK is broadly encouraging. The British Economy in Q1 grew by 0.7% which was the strongest expansion seen in over two years, and as a result, has beaten all forecasts. Insofar that Q2 is likely to be flat, that can be attributed to the dampening effect of the general election, hence the fact there was a jump in vacancies in July is a good sign.
Could the proposed changes to the minimum wage increase unemployment?
With the Labour Party now in-situ, changes are being proposed to employment law which have the potential to be transformative to the UK, where the minimum wage is a key area being scrutinised. The proposal to scrap the tiered structure of the minimum wage, which means that there will be no difference in treatment, between those aged 16 year olds or those over 21 has the potential to cause a significant impact in the job market in terms of entry level roles. The question is, what are the likely second order consequences?
Miliband cancels new drilling licenses in the North Sea. What now?
In one stroke of a ministerial pen, the drilling licenses which Sunak had committed to, were cancelled. Miliband for a long time has been an advocate of clean energy and has committed to decarbonizing the national grid, in full, by 2030. At the same time, in a sign this Government are prepared to tackle the NIMBYs head on, previous restrictions regarding on shore wind farms are to be removed and investment into solar power infrastructure is to be trebled.
Can Labour Kickstart the Northern Powerhouse?
Given the recent general election, it is no surprise that vacancies dropped in June. With Businesses waiting on the outcome of the election, whilst Labour winning was a given, the coming weeks will now see a blitz of policy announcements, which will give greater clarity when it comes to investment.
Final Countdown to Election day, but what about after?
Is it the responsibility of Government to directly stimulate economic growth, or is it for them to create the environment where businesses invest themselves? Statism, or interventionist supply side policies are coming to the fore once more, and for the incoming Labour Government, there are a myriad of policy proposals designed to achieve growth.
Technology, Automation and the future of Banking
For the UK, Financial Services has a critical part to play, in terms of GDP, our balance of payments and employment. Within the Financial Services industry though, increasingly Fintech is starting to come to the fore. New challengers such as Starling, Monzo, Revolut and Wise have disrupted the incumbents and as a result, the industry has permanently changed.
Labour’s tax dilemma
The impact of the budget on tax recruitment is apparent. March 2024 was the record month for tax vacancies going back to January 2019, beating even the peak post pandemic months in 2021. At the same time, in a recent report featured in Bloomberg, the UK is set to see 9,500 millionaires repatriate away, which is more than any other country globally, with the exception of China.
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