Our reflection on the Autumn budget and the potential impact on the job market.....

This budget, more than most, saw many of us break into our day's work to listen intently to how our businesses would be taxed and our personal finances affected.

It was the first time since 2010 that a Labour Chancellor had the opportunity to stand up and set out their stall for how they intended to run the public finances, and after months of trailing what changes might be made, there was much anticipation from us all to see how we would all fair.

Whilst key facts and policies had been scant during the general election campaign from Labour, in favour of a broad modus operandi of “let’s see what we have, what the real state of things is, let’s consult and then plot a course” (that’s there or there abouts I hope!), we’d all assumed a Labour Government would be a left leaning government, supported by the unions, and with a broad aim to support “the working person”.

So, several questions came to mind whilst waiting for the budget to be announced:

• What would any resultant policies mean for the ‘job market?’
• Could the budget be expected to support the creation of more jobs? different jobs? less jobs?
• A mix between different roles at different seniorities?
• Would different sectors be affected differently?

It really all was to play for; it was all relatively unknown.

If Labour kept their election promises, the “working person” would suffer no increased taxes. NI, PAYE, and VAT would all remain static and so the “working person” could breathe easy, look forward to being able to afford more than they did last year. And, on the face of it, October’s 2024 budget delivered on this promise.

However, the devil is in the detail, right? Employers NI increasing by 1.2%, allowances after which NI was applied decreased, both these changes saw employers’ costs increase. Would employers ‘swallow’ these additional costs? Would they increase prices to consumers and business, and Government? (more of that later) How would this affect the jobs market?

One thing that is often overlooked when assessing the “state” of the job market is the demand from candidates, or candidate sentiment. We tend to focus on metrics like which companies are hiring, where layoffs are happening, or identifying sectors facing critical skill shortages. However, this overlooks the perspective of candidates—the people considering or actively seeking new opportunities. Their motivations, job preferences, and willingness to move from one role to another significantly shape the market.

For our search business, I’d estimate that for every active jobseeker, there are about one hundred “passive” candidates—professionals who are currently employed and not actively looking but may still consider a new role under the right conditions. This disparity suggests that even within the pool of active jobseekers, a significant number may well be freelancers or interim professionals, which reduces the ratio of passive/jobseeker candidates still further.

So, let’s focus on the vast majority of the candidates search firms work with, candidates in employment, busy, passive. And the killer question is – what if this budget leaves them feeling unsure of the future and not wanting to consider a move? Post Covid, candidates have, in greater numbers, been more wary, less willing to engage initial dialogue, than they were pre-Covid.

At Grichan Whitestone our initial contact is what I would describe as ‘professionally personable’ We do not deluge potential candidates with bulk email campaigns; we call them. We call them and have a brief ready to send them by email. We have thought about their suitability in the round, and unless we have been requested to represent our client confidentially, at least initially, we always have a good compelling story to tell as why someone would receive a brief. For interest that sees 90%+ of first contacts say “Yes!” to receiving a brief.

Back to candidate confidence.

It’s now November, a few weeks after the budget, yet my initial impressions are that candidate confidence has been decreased by what our new Labour Chancellor had to say and considerations about mortgage rates, job security, fuelled by that increase in employers NI, are having an effect. Put bluntly, unless people are unhappy where they are, at least for the meantime, they are staying put in their current roles in more numbers.

It matters not a jot if availability of roles is high, or low, if candidates do not want to engage. We have also seen this with the uptake in EV’s on our roads. Consumers are unsure how government policy will wax and wane and so they are disinclined to adopt expensive new technology. In November, this year the same sentiment is in the ‘job market’ post budget.

Back to demand.

Our sector of interest is predominantly the complex outsource sector. In that sector, post budget, we have been inundated with enquiries for commencement of new senior searches.

However, engagement seems to be at the point where our clients are nigh on 100% sure that a contract win requires a new senior hire. Companies are not hiring speculatively in advance of a need.

We’re yet to see what this new Government does in terms or more of less ‘engagement’ with the private sector. One would assume ‘insource’ would be the natural position for a Labour government; yet whilst we had all sorts of output pre-budget about other tax changes, nothing yet has been made of changes to the model of partnership with the big outsourcers.

We’ve plotted ‘demand’ out until the end of the tax year, and I can report for us, the future looks bright. Both operational roles and growth roles are in demand and so for those that want to take what looks like a minimal ‘risk,’ a shiny new role with a better salary, and a move on career wise is within reach.

I think I’ve managed to plot an ‘un-political’ route through this piece so far. I’m not about to change that now, yet there’s one more thing I will add that whoever reads this piece will find interesting surrounding the 1.2% employers NI increase.

In the course of my week, I obviously see and speak with my customers. Given Grichan Whitestone Partnership is an executive search firm, our economic buyers are usually Chairs and C-suite within tier 1&2 companies. The overwhelming feedback on the NI increase is that this will either be passed back to Customers (public and private), or more easily, have a detrimental effect on salary increments across the board in the spring of 2025. Whether this will be done openly with employees is yet to be seen, yet I can’t help wondering that when it does materialise workforces will conclude this was inevitable and the bad feeling will turn on a government that has already ‘enjoyed’ the quickest polled decrease in popularity ever seen in recent history.