How deep have recruitment cuts been as a result of the recession? Were the cuts in the form of redundancies, freezes or organisations making more use
of temporary staff, for example?
When job cuts were at their worst during the recession, we saw a peak of 299,000 redundancies in the UK in
Wonly three months as employers sought to cut costs.
However, the UK wasn’t alone in the scale of unemployment that swept across the country: the rest of Europe also took a big hit. Spain, in particular, has been hit hard. Only two years ago, Spain was creating a third of all new jobs in the European Union, largely on the back of its booming construction sector. But when the housing industry crumbled in the recession, Spain felt the impact and its unemployment rate rose to about 15 per cent.
In response to the recession, many private sector companies in the UK also introduced widescale pay freezes or pay cuts in an attempt to cut costs, which affected millions of workers. Several professional services firms reduced employee salaries by 20 per cent by putting them onto a four-day week.
Despite the mass scale of redundancies, pay freezes and unemployment across the globe, in the UK more than a million temporary workers were still out on assignment each week. The flexibility that temporary staff gave to struggling employers was one of the main reasons that the UK jobs market was able to remain more flexible than its international competitors, and avoided unemployment rates as high as they were in countries such as the US and Spain.
Which industries have been worst hit by the downturn?
The financial services sector was one of the first industries to be affected by a mass wave of redundancies at the start of the recession, but the Recruitment and Employment Confederation (REC)’s monthly recruitment industry survey, the Report on Jobs, highlighted that it was also one of the first to show signs of improvement. Other sectors, such as construction and engineering, IT and computing, and hotels and catering, also struggled significantly in the downturn.
Despite the abundance of job seekers, there are still many businesses that are experiencing acute skills shortages in their workforce. The accounting and financial services sectors are experiencing shortages in insurance underwriters and credit controllers; and the construction industry is short of structural surveyors. Qualified nurses, engineering specialists and chefs all continue to remain in short supply too.
Did the cuts hit all levels of workers? Were there any particular workers that were ‘recession proof’?
Nurses, doctors, teachers and social care professionals remained in demand throughout the recession. Schools and the National Health Service made good use of locum doctors, temporary nurses and supply teachers to cover for sickness, training and unexpected peaks in demand. The public sector was able to withstand the recession and in many instances, recruit candidates from the private sector.
Now the recession is officially over, have companies started to review their recruitment strategies again? If so, in what way?
The latest Jobs Outlook survey from the REC shows that confidence is returning among employers. It reveals that 94 per cent expect to either maintain or increase their permanent workforce in the next 12 months.
Naturally, businesses are cautious about the economic recovery, which is why the latest survey clearly highlights that temporary and contract workers will continue to provide a useful outlet to employers when rebuilding their workforce. One in four employers is planning to take on more temporary staff in the next year.
Is there an optimum time to begin hiring again?
The international jobs market has been left in an incredibly fragile state since the official end of the UK recession [in the final quarter of 2009]. Many businesses, especially those that operate in a number of countries, are unaware of the best methods to rebuild their workforce.
Instigating flexible working options such as temporary, contract and interim management work, gives employers the chance to react quickly to new opportunities in a challenging market, as well as providing a vital outlet at a time when employers are naturally cautious about taking new staff on permanently.
It also helps employers to take the pressure off overstretched staff and fill specialist, highly skilled roles that are difficult to find permanent workers for. As such, flexible staffing arrangements are key to the resourcing of most large public or private sector organisations. The nature of temporary work continues to evolve and as such, we are increasingly seeing flexible workers recruited for highly skilled sectors including technology, engineering and financial services.
Are there any sectors in particular you predict will rapidly begin hiring again? Which might be the slower sectors?
The latest Report on Jobs showed that demand for permanent and temporary staff rose in January in all sectors, including engineering, construction and accounting and financial services. It also showed that the largest rise in demand for permanent workers was in IT and computing. For temporary workers, the largest rise was in the secretarial and clerical temporary sector. If the economy remains on track and doesn’t go into a double-dip recession, this positive rise in demand for workers is set only to continue. However, construction remains a notably weak performer in terms of employment, although the rate of job losses has slowed considerably from this time last year.
Did sustainable procurement, in terms of recruitment, go off the radar during the recession? If so, will it be back on the agenda again? How important is this?
In some instances, sustainable procurement did go off the radar in the downturn. However, while the private sector has adapted accordingly, a new approach to public sector resourcing is urgently needed. If new and workable methods aren’t implemented, short-term cost reductions will severely hamper the delivery of public services. Flexible resourcing must be seen as part of the solution rather than part of the problem.
Experience shows that if sustainable reform is not implemented, expenditure will increase as soon as the pressure on costs is removed. Improving current processes combined with new ways of working could deliver huge efficiency in the public sector. Looking ahead, what we need is for the public sector to take a new approach and use its recruitment partners to help it do things differently and more effectively.
Do you predict further cuts? Or should organisations feel optimistic about labour market movement?
The REC was one of the first organisations to predict that unemployment in the UK would not reach the three million mark. However, despite the news that we are out of the recession, that unemployment has dropped marginally and that demand for workers is on the rise, the jobs market remains fragile. There are a number of factors that could jeopardise any recovery, especially given the impending budget cuts in the public sector.
The public sector has added jobs throughout the recession, which cushioned the sharp decline in private sector employment, but this trend could reverse in the event of early cutbacks to public spending. However, an ill-conceived dash for short-term cuts in public expenditure could cause irreparable damage to the delivery of frontline services.
This is why the REC is trying to convince the UK’s major political parties and public sector organisations that reform, rather than random cuts, is what is needed in response to the impending public sector expenditure crisis.
Kevin Green (Kevingreen@rec.uk.com) is chief executive of the Recruitment and Employment Confederation, the representative body for the UK’s £22.5 billion private recruitment and staffing industry
