Posted by Robert Half on 12 August 2014
The UK labour market is seemingly going from strength to strength. With the economic picture continuing to improve, employers are gaining the confidence they need to recruit and build up their teams. Free from the shackles of recession, and conscious of the opportunities available for ambitious businesses, they are looking to increase their headcounts and boost capacity.
A number of studies have pointed to rising employment levels in recent weeks. The Office for National Statistics reported that the UK employment rate reached 73.1 per cent in the three months to May, as the number of people in work rose to 30.64 million. The employment rate last reached this height in the period of December 2004 to February 2005 and is the highest since records began in 1971. A 20 per cent rise in vacancies was then highlighted by the Association of Professional Staffing Companies, while the Federation of Small Businesses and Confederation of British Industry also reported increases in demand for labour.
Latest research from Robert Half - which surveyed organisations in the human resources, finance and financial services sectors - has offered a similarly optimistic view for jobseekers. Some 44 per cent of C-suite executives said their organisation intends to add new positions between July and December, up from 29 per cent 12 months earlier. Another 49 per cent said they would fill any gaps in the workforce created by departing staff, with just five per cent planning to leave such positions vacant. Just one per cent - down from two per cent last year - said they would be taking active steps to eliminate positions.
But while the market is growing and demand for staff is on the rise, there are challenges for employers. With so many organisations looking to take on new employees, many are finding it difficult to attract individuals with the skill and expertise they need. A third of C-suite executives (33 per cent) said it was 'very challenging' to recruit suitably equipped people for their expansion plans, while another 60 per cent described the market as 'somewhat challenging'. The main problem being experienced by employers is a lack of niche technical experts (34 per cent), while 33 per cent of respondents said general demand outweighs supply.
A fifth of employers (20 per cent) said the talent shortages being experienced in mid-2014 are the result of slowed hiring during the downturn. Respondents said the difficult hiring climate over the past few years means there are fewer people available with the skills they need. Another 14 per cent of C-Suite executives claimed a lack of commercial skills were hampering their recruitment efforts.
Finance hiring climate in 2014
Financial services employers appear to be most optimistic at present, with 48 per cent of chief financial officers planning to hire during the second half of 2014. This is up from 37 per cent at the equivalent point in 2013, showing a clear rise in demand. The main reasons for hiring were to support new projects and initiatives (63 per cent), penetrate new markets (46 per cent) and target international business growth (42 per cent).
The main areas within financial services requiring additional support include accounting and finance (77 per cent), operations support (56 per cent) and business development (29 per cent). However, a net 97 per cent of executives said it is either 'very challenging' (50 per cent) or somewhat challenging (47 per cent) to find skilled professionals in the current market. Compliance roles (90 per cent) are proving hardest to fill, followed by finance (86 per cent), data analytics (84 per cent) and risk (83 per cent).
Robert Half's study revealed that there is also strong demand for accountants, with 45 per cent of finance directors looking to hire in the second half of 2014. This compares to 28 per cent 12 months ago. Over half (53 per cent) said they plan to only fill vacated positions, while one per cent are expecting to make redundancies. The top three reasons for hiring are new projects and initiatives (73 per cent), business growth or expansion (52 per cent) and new market penetration (47 per cent).
Is the hiring climate improving?
Phil Sheridan, senior managing director at Robert Half UK, noted that hiring levels are returning to pre-recessionary levels, as many C-Suite executives look to add more weight and support to their departments in order to grow their operations. "Businesses are no longer just replacing leavers but are now looking to substantially expand their teams," he stated. "Resourcing is fundamental to an organisation’s success, with strong individuals driving business critical growth initiatives."
But the supply versus demand issue shows few signs of going away. Mr Sheridan warned that skills shortages across the UK economy are becoming "a major issue", with this deficit putting businesses at increased risk. If businesses are unable to bring in the people they need, their growth will be constrained. And this is why many organisations are choosing to pay a premium for top talent, in order to attract and retain the individuals capable of taking them forward in this hiring climate.