At the outset of the pandemic, many economists said it would take a long time for the economy to recover. As reported in the Guardian in April 2020, the EY Item Club said it would take until 2023 for the economy to return to pre-pandemic levels. Fast forward a year though, and the EY Item Club’s own website had changed its tune, telling us that they had “significantly upgraded the UK’s economic growth prospects for 2021” and that “the UK economy (will be) returning to its Q4 2019 level in Q2 2022.”
The latest ONS stats (published in August) showed that the UK economy continues to grow, by 4.8% in Q2, a level far stronger than many other western nations. That said, it’s still 4.4% smaller than in Q4 2019, although as explained here and here, the way in which we measure performance actually flatters how well we are doing.
That said, one area where there is unanimity is in the employment market. Tech, in particular, is surging and will be central to the continuing growth and re-calibration of the economy. Lockdown and the accompanying economic meltdown have accelerated the pace of change – and technology underpins much of the good work that has been done to reposition businesses and make them more efficient and competitive. In particular, thousands and thousands of SMEs have pivoted online and found that they can not only survive but actually thrive. And, of course, with this has come a rapid increase in demand for the people with the technological skills to make it all happen…
We see this at Be-IT and we’re not alone in noting just how much demand for quality IT professionals has ballooned over the last 10 months. In the years before Covid, there were well-publicised shortages in many areas of the perm and temp IT markets but we invariably managed to find the people our clients wanted.
Today, though, both contractor and perm recruitment are a real battlefield. Employers, desperate for the staff they need to forge ahead, are struggling to hire and many are resorting to offering substantially increased pay to attract the perm staff they need. However, as I’ll argue below, this is a one-trick pony, with no guarantee of success. Faced with pent-up demand for techies, employers are also turning to the contractor market, but this has been muddied somewhat because many are still adopting a blanket approach for IR35 and avoiding introductions to PCS contractors.
What we’re seeing on a daily basis applies to both perm and temp markets and, in a nutshell, it’s that hiking pay, while frequently necessary, is not enough on its own to win the war for talent.
As Covid-19 rolled over us all last March, we saw a huge drop in vacancies as jobs were put on hold while we all waited to see the course of the pandemic. As you’ll remember, last summer (2020) was actually quite a good period, with infection levels falling and the IT job market made a tentative stab at recovery. Then came the autumn and winter waves and another collapse in IT jobs, but by November/December things were turning around. Employers and employees had come to terms with WFH and with IT being particularly suited to flexible working things started to look a whole lot better.
Over the last year, what we’re seeing is candidates demanding not just better pay but, and this is the crucial factor that employers really need to focus on, the opportunities to be involved in the most interesting and challenging work they can get. People’s motivation for working has changed due to Covid. Our consultants are constantly asked in great detail about the work involved in any project or vacancy. Candidates have a huge range of choice today and will not rush to sign up to the first person who dangles pound signs in front of their eyes. Not only is the quality of the work (and the work environment) key, but flexible working is a sine qua non in the vast majority of cases. Employers who don’t offer perm candidates the specific combination of challenging, high-quality work, a similarly first-class work environment (online and in-office), imaginative and attractive benefits, all-round flexibility and (of course) the competitive pay they are looking for have less chance of making a successful hire. This applies equally to contractors, but with the added requirement that contractors are generally avoiding anything that comes under IR35.
Finally, it’s important to remind everyone that we’ve seen the average length of tenure reduce over the last few years. Add in the current buyers’ market for candidates and retention is, therefore, even more important than ever. With the pandemic now settling down (we hope!) and people becoming inured to Covid being an endemic disease, we think that the drive towards greater flexible working will continue, so pay what you can, move quickly, give your people interesting, enjoyable work and look after them. If you don’t, someone else will!
Nikola Kelly, MD, Be-IT Resourcing and Be-IT Projects