These are confusing times for those of us with an interest (and who hasn’t?) in the UK labour market.
There’s certainly no shortage of bad news stories. If you’re a graduate applying for your first job, chances are there’ll be more than 80 others that you’ll have to beat to the role or more than 200 should the bright lights of the much maligned investment banking sector appeal (which maybe tells us something about the difference between anger and envy in our society); there are already 140,000 fewer public sector jobs than when Labour left power; and wages are falling in real terms at nearly three percent per annum, to name just three.
You have to be well into your seventies to have lived through a period of such sustained economic contraction. Even now, as we enter our 14th quarter since the UK entered recession in the spring of 2008, GDP is still some 5% lower than its peak. Remarkably though, total unemployment is “only” 2.4 million, or about 7.5 percent, and total employment is back within a whisker of its pre-recession peak. Nearly 400,000 new private sector jobs have been created in the last 18 months, a level consistent with the boom years of the mid noughties.
Were we following the precedent of any other post war downturn – in the early 90s a 2% fall in GDP saw more than 3 million out of work - unemployment would be pushing five million with a resulting impact on social cohesion which might make recent Whitehall demonstrations look like WI debates.
So what conclusions can we draw and what are the implications for those of us planning to hire staff in the second half of 2011?
While any new job creation must be good news, it’s clear many are in either part time roles or in low output “macjobs”, which suggests a worrying rebalancing into low value add endeavours. Put simply, if this continues, it’s going to take more of us working longer hours, and earning less, to produce the same amount of output that we did before.
The market is strongest for experienced high skill workers. This is where employers currently believe they will achieve the quickest return on their hiring investment. Age may even have become an advantage. Anecdotally, specialist recruitment agencies – particularly those in London and the South East and without overly High Street reliant client bases – are having quite a good time of it. It may not be like 2007 again yet, but it certainly doesn’t feel like a depression either.
Conversely, the market is toughest for inexperienced high skill workers, ie. graduates. Many of these generation Y’ers may also be reluctant (or some might say, not yet desperate enough) to take the unglamorous jobs on offer. Youth unemployment remains stubbornly close to 20%.
For employers bold enough and brave enough to bite the bullet, this may be a once in a generation opportunity to cherry pick the best graduate talent in the market place, and to stock up their boardrooms for the 2030s. Instead of cancelling their graduate programmes this is probably the time to expand them. Something for us all to consider as we await the traditional start of the graduate recruitment season in September.
John Hunter is a Director of True North Human Capital Ltd.
True North is the Human Capital Management Consultancy founded by Norman Burden, Jo Dalton and Non Exec Chair Wanda Goldwag, that lives and breathes the people challenges that most companies no matter what their size face as they go to great lengths and expense to ensure they attract, retain and develop the best staff
