Tag: REC

Recruiters report difficulty in sourcing candidates

A survey conducted by the Recruitment & Employment Confederation (REC) reported that nine in ten recruiters (88%) say that labour shortages are one of their biggest concerns for the remainder of 2021, while skills shortages are a major concern for two in three (65%).

With shortages hitting every sector of the economy and many staffing companies reporting the tightest labour market they’ve ever experienced, the REC is calling on business and the government to take urgent action to solve the problem.

Recruiters have a significantly higher number of roles to fill than before the pandemic, with three in five (58%) having at least 30% more vacancies than pre-pandemic. Of the 191 recruiters surveyed, almost all (97%) said that it was taking longer than usual to fill those vacancies, compounding the problem. Half (50%) reported that it now takes more than a month to find suitable candidates.

Recruiters reported several factors were affecting their ability to source candidates. The top reason was skills shortages (cited by 65% of respondents), followed by the new immigration rules (57%) and their clients not being able to offer competitive salaries (53%).

In response, the REC has set out a number of asks for both government and business to help solve this crisis:

  • Set up a cross-government forum including the Business, Education and Work and Pensions departments, as well as business organisations. This would restore the importance of workforce planning in the economic debate between business, government and other stakeholders, not only focusing on skills.
  • Broaden the apprenticeship levy and increase funding for training at lower skill levels. This would improve progression and transition opportunities for lower-skilled and temporary workers who need them most, and encourage business to do more here in the UK, not less.
  • Allow flexibility in the point-based immigration system and a visa route for lower-skilled workers, which would allow firms in the worst-affected sectors like logistics to access staff at times of pressing need.
  • Increased focus from businesses on workforce planning, staff engagement, attraction and retention policies. Firms need to raise workforce planning up to the senior leadership level, and work with key professional partners like recruiters to boost performance, productivity and staff wellbeing.

This also follows recent research from British Future, which found increasingly positive public attitudes towards immigration. Two thirds of the public (65%) agree that employers should be allowed to recruit from overseas for roles in shortage – showing that a more flexible immigration system would be popular as well as helping businesses to fill crucial vacancies.

Kate Shoesmith, Deputy CEO of the REC, said:

“Worker shortages are a huge problem for employers and their recruitment partners, across all industries and regions. Vacancy numbers are far higher than pre-pandemic, and it is taking much longer to fill them. This is putting the recovery at risk by putting capacity constraints on the economy, as last week’s GDP figures showed. In our survey, recruiters also highlighted a wide range of factors that have combined to cause these shortages – this is a complex problem with no one easy fix.

“As such, we will only solve these shortages through a collaborative approach. We’re glad that multiple government departments are coming together in a joint forum to tackle the issue, but to be effective it must also include business and industry experts. Government must allow more flexibility in the immigration system so firms can hire essential workers like drivers from abroad, and also improve training opportunities for lower-paid and temporary workers. Meanwhile companies need to focus on how they will attract and retain staff through improved conditions and facilities, not just pay.”

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Starting salaries for permanent candidates rise 

KPMG and the REC’s latest UK Report on Jobs was compiled by IHS Markit and was based on responses to questionnaires completed by approximately 400 UK recruitment and employment consultancies.  

Due to a sharp rise in economic activity in the last few months, along with a solid demand for staff, a considerable increase in permanent placements took place, while the number of temporary placements also rose.  

The report revealed a decrease in candidate availability, which isn’t new news considering skills shortages. The reduction in candidates, according to the report, meant there was a dramatic increase in starting salaries for permanent staff and a large increase in salary for short-term positions.  

 Availability of workers falls  

The availability of candidates dropped to a record low this month and, according to the report, underlying data revealed that unprecedented falls in permanent candidate numbers and temp staff supply had driven the latest deterioration in overall availability. The declines were widely associated with a reluctance among employees to switch roles due to the pandemic, fewer EU workers, furloughed staff and skill shortages. 

The combination of Brexit and COVID-19 and the resultant skills shortages have led to increased competition for staff amid the dwindling labour supply. This placed upward on starting salaries. A notable finding in the report stated that salaries for newly placed permanent staff increased at the fastest rate seen in almost 24 years.  

Increased competition for staff amid shrinking labour supply placed further upward pressure on starting pay. Notably, salaries for newly-placed permanent staff increased at the fastest rate seen in nearly 24 years of data collection, while temp wage inflation was the second-quickest on record. 

Regional and sector changes  

All four regions monitored in England, recorded faster rises in permanent placements when compared to the latest survey period. The increase was led by London. Unprecedented upturns were also seen in the North and South of England. London registered the fastest rise in temp billings during August.  

The private sector continued to record much stronger increases in vacancies than the public sector halfway through the third quarter. The steepest increase in demand was signaled for permanent staff in the private sector.  

Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, commented on the survey results:  

“Candidate shortages continue to plague businesses, who are all recruiting from the same pool of talent and struggling to fill gaps. While record high permanent placements and higher starting salaries mean it remains a job seekers market, recruiters and employers have seen the most severe decline of candidate availability in the survey’s history and will be thinking about how to attract and retain new staff.  

“This crisis isn’t going away, and the winding down of the furlough scheme at the end of September – while potentially bringing more job hunters to the market – could also add fuel to the labour shortage fire. Many businesses will have changed their business model during the pandemic, and so significant numbers of staff returning from furlough may need reskilling to rejoin the workforce in the same or another sector. 

Neil Carberry, Chief Executive of the REC also commented: “Recruiters are working around the clock, placing more people into work than ever as these figures show. Switching the entire economy on over the summer has created a unique demand spike, and a short-term crisis. 

“But it would be a mistake for businesses to think of this as only a short-term issue. A number of factors mean that the UK labour market will remain tight for several years to come. Business leaders should be looking now at how they will build their future workforces, in partnership with recruiters, including the skills and career path development.”

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UK employers are struggling with the worst labour shortages for almost a quarter of a century as the reopening of the economy continues.

The Recruitment & Employment Confederation (REC) warned that the availability of workers was deteriorating at a record pace, fuelled by factors such as increased hiring, Brexit, pandemic-related uncertainty and the furlough scheme.

The latest REC/KPMG UK Report on Jobs survey revealed that in June permanent staff appointments expanded at the fastest rate since the survey began in October 1997, while temp billings grew at their highest level for nearly 23 years.

But during the same time period, the availability of workers fell at an unprecedented rate, leading to a sharp increase in starting rates of pay.

The demand for staff continued to move beyond crisis-hit sectors such as hospitality, with jobs in IT and computing rising the fastest in June, followed by hotel and catering jobs and engineering.

Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK, said the latest figures showed action was needed to address the country’s skills gap: “For the fourth month running we’re seeing a decline in the availability of candidates to fill all these new roles and the most severe deterioration for 24 years. We need action from businesses and government to reskill and upskill furloughed and prospective workers now more than ever, as the increasing skills gap in the workforce has the potential to slow the UK’s economic recovery.”

Neil Carberry, Chief Executive of the REC, added: “Recruiters are working flat out to fill roles across our economy. The jobs market is improving at the fastest pace we have ever seen, but it is still an unpredictable time. We can’t yet tell how much the ending of furlough and greater candidate confidence will help to meet this rising demand for staff. In some key shortage sectors like hospitality, food, driving and IT, more support is likely to be needed to avoid slowing the recovery.

“That means supporting transitions into growing sectors through unemployment support and new skills programmes, as well as making sure the new immigration system reacts to demand, as promised. But it also means that hiring companies need to re-assess their workforce plans. In a tight jobs market, working with professional recruiters to position your firm as an employer of choice is a must.”

Further pain ahead

The situation is likely to get even worse when the travel industry gets back on its feet if the results of a separate survey are to be believed.

Ahead of Grant Schapps’ announcement of the scrapping of home quarantine for fully vaccinated travellers, job board CV-Library ran a survey of travel and tourism workers and found that almost 60% were not planning to return to the industry.

Of those responding to the survey, 68.4% believed the industry would face a shortage of workers, with  58.1% saying they weren’t considering returning even once the industry is fully operational again.

When asked why they were turning their back on the industry, the main reason was that it had shut down and jobs were no longer available. However, almost a third of respondents (30%) said they felt the industry was too unpredictable and almost half (47.2%) felt that the salaries and benefits on offer were now worse than in pre-pandemic times.

Lee Biggins, CEO and founder of CV-library, said: “These results should be alarming for employers, but, sadly, they aren’t surprising. We’ve all witnessed the impact of this pandemic on the hospitality sector and the travel and tourism industry has been the hardest hit sector of all. As such, a shortage of candidates when the restrictions are lifted feels somewhat inevitable.

“It’s crucial that businesses take notice of these results and listen to job seekers. There are plenty of staff out there but, in order to recruit, businesses can’t just pick up where they left off. Competitive pay and benefits must be offered, and with the industry unlikely to be provided with much notice to get back up and running, those with the strongest employer proposition will win the race for talent.”

Graduate solution?

One potential avenue employers grappling with shortages may wish to explore is adapting some of their positions to appeal to the graduate market.

Though vacancy numbers as a whole may be rising, in the graduate market the reverse is true: data from job board network Broadbean showed that graduate and training vacancies were down 66% on pre-pandemic levels in the first half of this year, as well as being down 34% on the first half of last year, when the country was in the thick of the pandemic.

This has led to a situation where the number of applicants per graduate vacancy now stands at 51, up 46% on 2019 numbers.

Alex Fourlis, Managing Director at Broadbean Technology, said: “It is concerning to see that graduate and early careers recruitment is faring considerably worse than other areas of the employment market.

“The fact that vacancy levels today are considerably lower than during the pandemic suggests that while employers are investing in experienced talent at a time when many sectors are contending with skills shortages, there is a real threat that this dearth of talent will be exacerbated in the coming months and years if graduate and early careers recruitment isn’t prioritised by companies.”

Photo courtesy of Canva.com

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Aidan Cramer, co-founder and CEO of JobLab

It won’t surprise you to learn that a bad hire can be expensive. Traditional recruitment agencies can take up to 30% of the final salary of any incoming employee. If that employee is paid the national average, that’s more than £5,000, and it climbs quickly if the person in question is taking a senior role.

But even this fails to tell the whole story. A report from the Recruitment & Employment Confederation (REC) found that although more than a third of companies believe hiring mistakes cost their business nothing, a poor hire at mid-manager level with a salary of £42,000 can cost a business more than £132,000 due to the accumulation of costs relating to training, lost productivity and more.

Low morale

What’s talked about far less is the cost of a bad hire in non-monetary terms, and this is especially relevant in small teams with flat hierarchies, such as those found in the start-up space. Bringing someone into your company who isn’t the right fit — due to their temperament, attitude to the job or skill set, for example — can have a devastating effect on the day-to-day functioning of the business.

The ‘wrong’ people sap the collective morale of the entire team, and naturally this has an impact on their productivity: as WIRED has reported, happy people are about 12% more productive.

Staff turnover

The logical end to falling morale is turnover. The threshold of unhappiness at work will vary from person to person, but everyone has a critical point at which they feel they have no choice but to leave. Successive departures begin to give off the impression that a business is poorly run or — much worse — a sinking ship, from which other employees may suddenly want to flee. It’s one of the most remarked-upon qualities of working millennials that they ‘job-hop’, or abandon companies which fail to fulfil certain professional needs, from money to purpose. You can rest assured that young people today will not feel a sudden rush of loyalty if their colleagues (and friends) start to get itchy feet.

Spread too thin

And then there’s the damage to the functioning of a business which, if it’s a start-up or a small company, relies upon the ability of its team members to work autonomously and responsibly, and to take care reliably of whatever tasks it is their role to perform. The ‘borderlessness’ of start-ups can mean that there will be someone who can take on the responsibilities of a bad hire, but this is hardly a long- or even medium-term solution: the quality of that someone’s own work will naturally diminish if she or he is spread too thin, and their morale will suffer, too.

Those responsible for hiring — often the founder herself in a start-up — will have to take themselves away from valuable activities to find a replacement for the bad hire. Soon you can find that there isn’t enough labour to go around.

Broken recruitment

It’s worth remembering that a bad hire can simply be the wrong fit even if they have the necessary skills for the job. An incoming employee may fail to assimilate into the company culture or have an approach to work that jars with those of everyone else.

The traditional recruitment model doesn’t help matters at all by relying heavily on a tired system of paper CVs and cover letters which benefits the privileged and contributes to the UK’s ultra-low productivity, by directing people to jobs for which they’re poorly suited. It’s also painfully slow, which exacerbates the problem of urgency that comes about when a company realises it has made a bad hire and tries to rectify the wrong.

Anyone who has braved the world of traditional recruitment will have experienced the frustration of having infrequent, impersonal communication or being put forward for the wrong jobs.

Hiring mistakes cost UK businesses billions each year, and recruitment fraud continues to be a problem. Both the candidates, who are denied meaningful work, and businesses, who are denied the people they need, lose out. In times of economic uncertainty, it’s especially important that businesses can find the people they need quickly and in such a way that the chance of making a mistake is dramatically reduced. If they fail to do that, the impact can be devastating.

Photo courtesy of Shutterstock.com

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Recruiters and associated HR services placed over 1.1m people into permanent jobs in 2017/18, and were responsible for placing more than 1m agency workers on any given day, according to new data published today by the Recruitment & Employment Confederation (REC).

The REC’s annual Recruitment Industry Trends report for 2017/18 showed that the total industry turnover from permanent and temporary/contract placements, and other HR services, reached £35.7 billion, an increase of 11% on last year. £30.85 billion was generated through temporary/contract placement activity, and approximately £4.84 billion through permanent placements.

The number of businesses operating in the UK recruitment industry grew by almost 10% in the year to March 2018, totalling 30,430, and the industry employed approximately 115,000 people.

Other figures from the 2017/18 report include:

  • Almost two thirds (64%) of temporary assignments were for 12+ weeks, while one in five (20%) were for 6+ months (compared to 61% and 20% respectively in 2016/17)
  • 85% of contract placements were for 12+ weeks, and 45% of contract workers were on assignment for 6+ months (compared to 80% and 44% respectively in 2016/17)
  • The average value of permanent placements from the wider recruitment industry was £4,238 (up by 6.4% on the average in 2016/17)
  • The average annualised turnover of each temporary/contract worker on assignment was £34,976 (up 20% on the average in 2016/17)

Recruitment Industry Trends 2017/18 also includes the REC’s forecast for the next three years, which remains positive despite the unknowns in the political landscape. The REC forecasts that the UK’s recruitment industry will grow by 4 per cent in 2018/19, 4.5% in 2019/20 and 5 per cent in 2020/21.

REC chief executive, Neil Carberry, said, “It has been an extraordinary year for recruitment and recruiters. Tight labour markets and quickly shifting skills needs have driven the growth of the industry – but only because recruiters have adapted swiftly to changing times. We see this increased value for clients reflected in our monthly survey feedback – recruitment is a key part of the UK’s world-leading professional services sector. We should celebrate an industry which boosts the economy and transforms candidates’ lives every single day.

“The path ahead is uncertain – Brexit, immigration reform, tax changes, technology. But this report shows that recruiters can look at that uncertainty and see the opportunities. Whatever the coming months and years bring, recruiters will continue to use their skills and knowledge to boost the UK’s labour market and find people their perfect job.”

Photo courtesy of Shutterstock.com

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