UK jobs outlook September 2020.

I don’t know about you but I’m scared. 

Ok, based on recent Linkedin comments, some of you aren’t scared, this is an opportunity to ‘pivot’, reinvent, commercialise and for recruitment agencies, double down. A lot of noise about how good things are.

But I don’t mind saying I’m scared. 

Because I am.

I wrote something similar not that long ago but in the world of Covid-19 that seems an age ago. As a Husband, Father and Son I was scared for all of us. So far we’ve weathered the storm but the financial toll will come unless something happens in the near future, which based on tightening of lockdown rules looks less and less likely. 

My business, immersive. relies heavily on organisations hiring. We help them hire more effectively, reduce their costs, build their employer brands. When organisations furlough and then make people redundancy organisations stop calling us. 

This is my fault.

As a CEO (Grand job title to mirror our target markets) I have stuck to the model we have, the services we provide, stripping all our costs out to weather the storm. For us every client matters, but a single client can make us.

My fear is for the future. As recently as February I stood in Olympia delivering a talk about full employment being the reason Talent Acquisition teams were struggling. I had lots of data to support my argument for, at that point, we had full employment and something like 1 million vacancies.

As a nation, since the recession of 2008 we have limped on with little or no increase in living standards, increasing national debt and below EU GDP growth but we were good at creating work and getting people jobs. In my world of mostly tech companies, they have been hiring like there is no tomorrow, driven by large sums of VC money swimming into their accounts, with lots of it being spent on people. 

Don’t get me wrong, this has served me and my business well.

Dig deeper though and you’ll find a murky trend. A rise in self-employment, not the “I’ve got an amazing idea” type of self-employment, more the “You buy your own van and work for us but actually you’re self employed” type of self-employment. Zero-hour contracts have increased significantly with ONS suggesting nearly a million workers hired on that basis. When furlough kicked in, many “workers” couldn’t take advantage of that, leaving them in the challenging position of work and the risk of illness or to stay at home with no income.

But now we are here.

It wasn’t planned but how we act next will make or break us, even the smug employed, working at organisations where they think they are teflon. It’s not all plain sailing though, big corporates are thinning their headcount as well.

But the numbers are confusing, despite an increase, unemployment rate in the UK is still only at 4.1 percent, a tiny increase, particularly when you look at the US that soared to 14.7 percent in April and is still at 10.2 percent. But we did something different, we invented the Job Retention Scheme, furlough as we know it.. There was much applause and when combined with the Eat Out to Help Out scheme Rishi Sunak has become the UK’s most popular politician.

Whatever we think about furlough, good and bad it’s hidden a moving bubble of ‘real’ hardship to come. When companies had to start paying their employees’ National Insurance and pension contributions summer redundancies rose. The scheme wraps up at the end of October. 

A recent survey by Lloyds Bank found that only 18 percent of businesses with furloughed workers expect to retain all their staff and from what I have read, there will be an estimated 4 million workers that remain reliant on the scheme and will be unlikely to have work to return to. I’m no economist but the potential of four million additional unemployed is frightening. That would be around 12 percent unemployment by Christmas. That is bad for you, me and everyone. I am old enough to remember the last recessions, doom of the 90’s and childhood memories of the 70’s and 80’s, we do not want to go back there.

So you get why I am scared. I’m selfishly scared for me, my team, my business and everyone I hold close. Things are going to get much much worse and whatever your view on Brexit, January 2021 with no deal will be bleak.

As I will keep saying, I am not an economist, but you knew that already. But I can read statistics, look at the data presented and take a view on what we could do based on that. 

Looking back to the last recession, Germany was the only G7 country not to have a fall in employment. They actually experienced that much heralded ‘V’ shape recession our own politicians have predicted, although awkwardly we’re not at the bottom of the V and more like to have a ‘see-saw’ recovery. Anyway, Germany has the Kurzarbeit (or “short work”) programme. Companies can use this all the time, not just now but has a cap of 12 months per claim. That has now been extended to 24 months, subsidising employee wages retained on a part-time basis, rather than insisting people don’t work at all and are paid to be at home.

Wouldn’t you rather work part-time than do nothing? I know as a business owner I want that. Better to have a team in, employed part-time doing useful things, contributing to our business than not? Yes Germany is in a better position than the UK economically but borrowing money has never been so cheap - some of the UK’s borrowing has been at a negative interest rate - so whilst the headline numbers are huge, the actual cost of keeping things going is not as large as it first appears.

If we have 12 percent unemployment, that is going to cost us as well, again I’m no economist but surely we’d be better off paying people to work, rather than paying them not to work and definitely better paying them to work than to be unemployed with all the socio-economic challenges that brings us going forward. The National Institute of Economic and Social Research has estimated that extending the furlough scheme until the middle of next year would near enough pay for itself. It would reduce redundancies which would reduce benefit payments and retain tax revenue as workers would still be taxed as they are now.

Being even more pessimistic, despite the daily increases in coronavirus cases in the UK the government is urging people to return to their offices in order to help sustain adjacent cafés, bars and restaurants. Schools have reopened and already one of my children has been sent home due to someone in their class having a positive test, just 5 days after returning. The increased mobility with schools and offices will increase the risk and severity of a second wave and if anything is going to kill our confidence in the economy and the future it’s a return to lockdown.

Is now the time to close the furlough scheme or maybe let’s do something different? How about we reinvent it to focus on contribution and productive work rather than staying at home not to work?

About

immersive. founder Martin is a seasoned talent acquisition leader and talent strategist (with a small 's'). With a straight talking, results focused approach he has recruited on a Global, Regional and Local level, creating and leading teams of recruiters, brand specialists and HR professionals in multiple locations.

Martin's firm, helps organisations of all sizes to hire great people successfully by delivering an embedded recruiting capability as a subscription model. This recruitment-as-a-service approach provides all the people, process and technology platform a business needs to start hiring with from day one.

But more than this, immersive. deploys talent acquisition professionals on a global basis to transform your hiring process, lead hiring projects or augment your existing talent acquisition team. 

And, when it comes to your brand, immersive. branding experts will guide you through how to create an authentic employer brand that brings people to your door.

To schedule a call with Martin click here.