Uncategorized Economy January 11, 2010

Recent good news on Jobs is welcome, but more pain to come?

You may have seen the revelation earlier this week by the Recruitment and Employment Confederation and KPMG, in their latest Report on Jobs, that the rise in permanent placements in the UK during December was the highest for nearly two-and-a-half years.

The report also said that December was the fifth successive month in which hiring of permanent employees grew and that temporary staff placements also rose during the period, to a 30-month high. So have we really turned the corner, and is UK PLC now into hiring mode again? I don’t think so.

I’m as happy as anyone at the good news, but I think it’s important to keep these developments in proportion. The reality is that I don’t expect overall unemployment levels to improve markedly in the short-term and, unfortunately, I think we have some further pain to endure in the coming months.

Trends in unemployment tend to lag behind underlying changes in the economy. We’re now hearing news of ‘green shoots’ and the ‘start of the recovery’, prompted by surveys such as that from Deloitte this week which showed confidence among finance directors at its highest for more than two years. However, there are still plenty of businesses out there that may not survive the year or still have tough decisions to make. And, of course, when government spending comes to a crashing halt, as it surely will in the next two years, the ripple effect will add to unemployment levels, especially among public sector workers.

Although, as the Report on Jobs indicates, companies which made deep cuts in their workforces early in the recession may now need to re-staff, I suspect most will do so very carefully – using self-employed, contract and temporary labour where they can.

The number of workers in these categories will therefore grow this year, as they make major contributions in all sectors of industry – this is a trend that I believe will continue.

The days of ‘one job for life’ have now truly gone and many roles can be flexible in their nature. If they’re planned well, new flexible employment arrangements can therefore suit both workers and employers.

One group to benefit from this trend could be the many retired people the recession is prompting to re-join the labour market, as many of them are specifically seeking part-time and flexible roles. Their availability could also be a boon for employers, especially in sectors such as manufacturing, as there are many highly-skilled operators among these aspiring returnees.

At the risk of going off at a slight tangent, it’s also worth pointing out that big changes are taking place in the means of hiring workers. In general, employers are finding that technology, the internet, social networks and personal recommendations or referrals are very effective and much cheaper than traditional methods of recruiting. Specialist recruitment agencies will still have a place in the future, particularly for employers seeking scarce skills or filling niches, but I do foresee a significant move away from traditional print advertising for recruitment in the months ahead.

So what does the next 12-24 months have in store for the UK job market? Do you see employment growing or contracting? And what is your view on new employment formats, and recruitment methods? Has the world really changed, or is it just another cycle of more of the same old things?

Let me have your thoughts, and any specific examples that you have to detract from or backup my points above.

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