Finding a candidate who is the right fit for your company is already a hard task. But current conditions are making things even more challenging for HR chiefs.
The number of job vacancies in the three months to October hit a record high of 1.17 million, according to the Office for National Statistics (ONS). Meanwhile, the unemployment rate shrank 0.2 percentage points to 4.3%.
This has created what Institute of Directors chief economist Kitty Ussher has described as a “vacancy paradox”, with record-high job adverts despite the percentage of payrolled employees topping pre-pandemic levels.
While labour shortages in the hospitality and haulage sectors have been the focus of media attention recently, the current vacancy rates either match or exceed pre-pandemic levels across all sectors of the economy.
The current conditions are reflected on employment sites, which are witnessing a jobs boom. Reed.co.uk tells Raconteur that the number of jobs posted on its site in September was 143,000, equating to a 150% year-on-year increase, while the number of companies advertising was at its highest level since January 2020.
TotalJobs has seen a similar trend as the number of job adverts on its site sat 29% above pre-pandemic levels in early September and were rising 18% week-on-week. It claims this has caused the competition for talent to reach “fever pitch”.
CEO of the jobs search site Jon Wilson claims that the current situation is unlike anything he has seen previously in his career. He says: “You won’t speak to anyone right now who’s getting exactly what they want out of the current job market. There’s 10% to 15% fewer people searching for jobs and 30% to 40% more jobs, which means that businesses are having to compete really hard for those people.”
A topsy-turvy labour market
The current situation means that the jobs market has now tipped in favour of employees, with some candidates reportedly doubling their earnings in a single move. Gaelle Blake, head of permanent appointments at recruitment firm Hays, says there is extremely high demand from her clients at the moment.
Blake adds: “The number of job openings is at a 20-year high and, at the same time, the number of people looking for jobs is at a 24-year low. What we’re feeling is a tension between a great amount of supply, in terms of choice of jobs for candidates, while there is also the least amount of people available to fill these positions.”
Many factors have contributed to the current situation, including more than 1 million foreign-born workers leaving the UK post-Brexit and pent-up demand from businesses for new recruits that built up over the course of the pandemic. It has created a situation that many HR managers have never had to deal with before.
Naturally, with more demand for a smaller supply of talent, wages have trended upwards. The ONS estimates that annual growth in pay was up 7.2% between August 2020 and 2021.
Potential hires are also noticing a shift in the power dynamic, with 29% of people recognising their value has increased since the outbreak of Covid-19, according to research by TotalJobs. This is translating into increased expectations from job seekers, with 48% saying they are being more selective in choosing a future employer and 42% prepared to negotiate their terms.
Standing out in a crowded market
The answer for many companies caught in the current recruitment paradox is to improve their offering for prospective hires. But it’s not just in terms of pay that businesses are competing.
Founder of design agency dn&co, Joy Nazzari, says the business has started offering a sign-on bonus to encourage people to join the team earlier. It is also promoting its benefits offering and the fact the business is part of an employee-owned trust on job ads.
Nazzari says: “I’m part of a Slack channel with hundreds of design agency founders set up as a pandemic problem-solving resource, but lately the dominant topic is how tight recruitment is. Many of us are increasing salaries to retain existing staff and, combined with inflation, we’ll need to increase prices or accept lower margins as a result, which is not sustainable.”
It’s a challenge facing businesses across many sectors. Alongside improved pay, galvanizing company Corbetts has moved to a three-day work week and is offering bonuses in a bid to fill its open positions. The issue facing Corbetts is also being exacerbated by companies such as Amazon offering a £3,000 starting bonuses for new staff.
Its chair Andy Dodwell claims that the current environment means the company has to make an instant decision when hiring. “The moment you see good people, you hire immediately without hesitation – you don’t have time to kiss the frogs any longer,” he adds.
Wilson advises companies to consider advertising the salary, non-financial benefits and making the company’s corporate social responsibility commitments more prominent to help improve conversion rates on job ads.
Similarly, Blake recommends condensing the recruitment process by cutting the number of interview rounds, making decisions speedily and promptly sending out contracts. “The longer you leave it, the more chance there is that the person you want gets offered a job by someone else,” she adds.
For any business hoping to wait it out, the situation is unlikely to return to normal any time soon. The Bank of England’s Monetary Policy Committee estimates that the unemployment rate will continue to decline until 2024, while 80% of UK employers plan to hire over the next 12 months, according to a survey from Hays.
This combination of conditions means that competition for talent is likely to remain high, or even increase over the course of the year. Blake says: “The longer you wait the more expensive it’s going to be and the fewer people you’ll have to choose from.”
This means the most important piece of advice for hiring managers is to put yourself in the market now and move quickly.