For the UK, 2023 has been a year characterised by inflation, an ongoing cost of living crisis and continuing geopolitical unrest. And these issues – together with changing preferences for working practices – mean the recruitment industry is at a critical juncture.
Within the world of work, the temporary worker market has remained robust, but this increased demand for flexibility and the shift to contract working has meant inefficiencies that have plagued recruitment agencies for years, such as payroll and payments, have only become more acute. Coupled with a high inflationary environment and workers struggling with cost of living pressures, UK recruitment businesses are operating in a particularly challenging market.
If these conditions continue into 2024 – as predictions suggest they may – it’s crucial that recruitment businesses are getting all the support they can to thrive. In particular, this means making use of technologies that can save them time, money and resources.
To truly understand how it is these technologies that will ensure the shift to the future world of recruitment is a smooth and successful one, it’s important to reflect on what happened in 2023, and look forward to what 2024 might hold…
Economic volatility continues
Economic volatility and financial unpredictability throughout 2023 has led to recruiters feeling pressure from clients to reduce their fees, risking a compromise in service quality, poor candidate placements and longer hiring cycles – all of which can harm an agency’s reputation.
Many businesses - not just recruiters - will be pleased to see that inflation has finally started to ease, with rates dropping sharply to 4.7% at the end of October. But we’re not out of the woods yet.
Although inflation rates may have dropped, they are still predicted to remain higher than in previous years, which is likely to have big implications for temporary staffing firms’ banking commitments. Despite this, certain sectors, such as healthcare, education and IT have continued to seek both permanent and temporary staff. And these sectors have been right to do so, benefiting from both increased agility and the best candidates.
Flexibility is here to stay
2023 has been a worker’s market. Employees are actively looking for more flexible roles in search of a better work-life balance, better wellbeing and better career opportunities. Sonovate’s own research supports this fact. 57% of individuals said working for businesses that embrace flexibility is important, 40% are now considering a portfolio career and 46% feel that contract working will be important to them at some point.
Kickstarted by the pandemic, and continuing throughout 2023, this shift to flexibility is something recruiters can now almost be certain in knowing is here to stay. As mentioned, those that have continued to seek permanent and temporary staff, despite economic volatility, will not just benefit from enhanced agility but are likely to be the ones attracting the best talent.
While not an immediate concern, next year’s potential change in government, and consequently potential change in regulation surrounding contingent workers – a group that is becoming more dominant in the workforce - requires consideration.
Issues with payroll persist
The shift to flexibility and contract working has shone a light on a historical sticking point that recruiters know all too well: payroll and payments. While money may no longer be the only motivator, people still want a fair wage and that includes being paid promptly for the work they do.
The recent plans to tackle the issue of late payments, recently announced in the Autumn Statement, are certainly a welcome change. However, even though measures to ensure private sector payments are completed in under 55 days is a positive step, no business should be forced to wait more than 30 days for invoices to be paid – the knock on effect is substantial.
In the summer of 2023, 38% of UK small and medium-sized businesses (SMEs) said they were now taking over 90 days to pay their contract staff. Not only have these changes caused workers to miss payments, but they have also caused a drain in contractor retention, with 37% of businesses admitting that they lost workers because they were unable to pay them promptly enough.
Luckily there are solutions out there that are now starting play a bigger role in bridging this gap, offering back-office solutions and flexible funding all in one place. By providing more flexible, scalable financing than traditional banks, fintech lenders can allow businesses to operate with a steadier cash flow, pursue growth and maintain competitiveness.
A human-centric sector
While tech developments like these are going to support recruiters, the sector must not forget that people have a big role to play – recruitment will always remain a sector that centrally relies on its people and can be a key differentiator in making a business great. As someone who has over nearly two decades of experience in the sector, this is something I have tried to replicate in my own business – ensuring tech solutions are coupled with high customer service.
However, the flux of changes in the workforce, accompanied by equally fast technological transformations should not be ignored. Emerging financial standards, developments in artificial intelligence (AI) and increased data insights are only going to play a bigger role in 2024 and are things that should be embraced.
Technology, AI and data has the ability to improve every stage of the recruitment process, from managing, to placing to paying contract workers. It can substantially reduce an agency’s cost and reduce a team’s workload, helping to improve margins, efficiencies, and the successful retention of contract workers. Ignoring this, runs the risk of getting left behind.
Preparing for the future world of recruitment
So, how can recruiters best prepare, not just for 2024 but ultimately, for the future world of recruitment? Certainly embracing innovative technologies that are centered on user needs will be pivotal in solving some of the sectors’ most difficult pain points experienced in 2023.
Recruiters should consider how implementing the right technology will support their business more broadly, helping to support the new flexible work of work, solidify funding and improve financial management.
While no one knows for sure what the future world of recruitment holds, those that embrace the latest technology, and future-proof their businesses with solutions that can adapt to the market, in whatever direction that may be, will be the ones to succeed.