OBR warns that the Covid -19 outbreak will shrink the UK economy by an estimated 35% by the end of spring and cause at least 2 million Job losses.
They estimate that GDP will plunge by a third in the second quarter and by circa 13% for 2020. Joblessness is expected to hit 10% by the end of June with borrowing at the fastest rate since the Second World War.
This means that after 10 years of steady job creation, this will be one heck of a fall. So, we are looking at a marked shift from exceptionally low unemployment <3% to what Is expected to be high unemployment >10%.
Subsequently the OBR are warning of an economic slump not seen since the great depression of the 1930s.
Now the OBR paints a very pessimistic outlook and although it may not end up that bad, even if they are half right, we are without doubt now looking at a switch from a Candidate driven market to an Employer Led Market. This would be the general direction and we need to be prepared for this change. It is going to be, without doubt, a new phase; so let us be ready for it.
Lets just remind ourselves first of the current situation. Where we are now is a market that, specifically millennia’s, will ever have known: -
Employers have had to adjust to jobs being candidate driven and not felt the real pressure until they have had to recruit someone. Candidates have been in the driving seat for some years now and been able to command more than just the best salary they can get.
Candidates have often had multiple job offers and their existing employers have had to offer more to retain them. Often, not just about basic salary, but the whole package. Competitive salaries being essential, flexible working hours, stronger study support, additional employee benefits etc. Where the employer cannot compete they risked losing the candidate to a competitor. Hence, they often paid over the odds to secure/ guarantee the talent.
When unemployment is at an all time low, as it has been, candidate attraction becomes absolute key. Companies need to consider attracting passive candidates. They worry about their company values and visions being attractive enough and if their online image is right. Speed of recruitment is essential to eliminate anyone else getting in and taking the candidate off them before they have chance to respond. A very much a “now, now” instant culture driven by candidates.
Companies are forced to sell their brand, their company culture and reputation to try and secure the top talent. Candidates have been able to pick and choose where they go, considering future progression, road maps, often a focus on what is in it for them with that company, rather than what they can deliver to that business. If employers do not sell their organisation well enough or make job adverts exciting enough, they can miss out on talent because the candidate has this free range.
Equally, in these conditions employers also have to work significantly harder at retention. Employees will leave if they don’t think the manager has their best interests at heart. They want regular reviews, .progress updates, reassurance they doing a great job, understanding of the work-life balance when issues arise and putting the employee first. They may leave a job without another Job to go to without any fear of not being re-employed elsewhere. It taken as a given that the jobs are there, so they can!
Employers have been worried that if employees leave, they will be difficult to replace. Often the employer will offer them more money and benefits to persuade them to stay. Yet in reality, for those candidates “brought back” because the market has been stacked in the employees’ favour, many ultimately leave within six months anyway.
So, the result has been that we have had too many job vacancies and not enough supply of candidates to fill them, or rather not enough supply of skilled candidates. This has been one of the primary challenges of the past. (Supply/demand ratio)
For Recruitment Agencies the conditions have been fairly good up until now because demand to get candidates has been high. However where there is a recession and a company stops hiring or reduces their workforce there is a glut of available talent on the market and far less demand for it.
For employers, their HR departments have never had to work so hard to find and recruit talent whilst battling to ensure staff retention levels remain high in their existing business.
A switch in some ways, in the longer term some may argue, could prove to be a good thing. It’s all about to change and businesses not only need to get used to a different way of working but candidate attitudes will change. Candidates will start to value secure employment more than ever and will, as a generalisation, likely become less demanding.
Some could consider it, almost as a new dawn. A market correction returning some power back into the hands of the employer. Whichever way you look at it there are going to be changes and HR departments will start to reflect this.
So, outside of wage costs most likely being driven down, there will be less pressure on companies to worry about longer term benefits for staff for retention .What else is likely going forward? We can certainly expect new job vacancy numbers to be lower for 2020. We could see an initial boost as companies initially re-open but that is likely to drift over the remaining half of the year.
As a result of the Covid19 outbreak specifically we are also highly likely to see: -
From our initial findings it’s clear that changes are now in play and business survival will be down to the companies that are the quickest to adapt and move to this new way of working.
Let us help you embrace these changes.
Our expert team here at Career Kinetics are on hand to demonstrate how processes can be improved at every stage of the recruitment cycle. Our managed services packages address all of the employer needs and concerns. Coupled with our advanced technology offerings, we can help ensure that your business stays ahead in the market, making the best use of technical advancements. We can support HR teams all the way at every stage of the process.
We will help you to actively reduce recruitment costs, reducing your admin process and would like to be considered as a handy extension of your own team, to utilise as you require.
Welcome to a New Dawn