What is the talent data telling us in November 2022?

I was speaking to a TA leader yesterday at a conference who told me that their organisation had moved on from talking about VUCA to talking about hyperVUCA. I think that's a fair assessment of the talent markets at the moment. In my 20+ years of working in the field, I can't think of a time that things have been more Volatile, Uncertain, Complex or Ambiguous (and I was recruiting in M3/M4 the telcom's, and what we used to call .com markets when that bubble burst in 2000 and was the head of a corporate treasury recruitment practice in the 2007/8 credit crunch).

I'm fascinated by the current talent markets, which is lucky as one of the things that I do as part of my role in Omni's Resourcing Transformation team, is look at the market data to try to get ahead of trends so we can identify trends that may have practical implications.

Each quarter Omni produces an overview of current data in our State of the Market Resourcing Insights Summary which considers data from: CIPD Labour Market Outlook, ONS Labour Market Overview and REC Jobs Outlook. As there is so much change going on at the moment, and so many people that I am speaking to are asking what our view of the market is, I thought I'd share what we are seeing in the data for November.

The signals continue to tell us that the UK talent market is hugely competitive. ?High inflation appears to be impacting both business confidence and wage demands. ?However, there may be signs that the demand side factors are beginning to relent.

?1.???Recruitment Intentions

Recruitment intentions remain historically high, but overall business confidence in the UK economy is at a record low.

The CIPD identifies that recruitment intentions continue to remain high but the net employment balance (the difference between employers expecting to increase vs those expecting to decrease staff levels in the next 3 months) is starting to soften. It is likely that the UK will continue to see increased employment. Information and communication, healthcare and construction are demonstrating the biggest relative demand.

However, REC’s analysis suggests that business confidence in the UK economy has fallen to a new record low and there has been a corresponding decrease in the confidence in making hiring and investment decisions and there has been a quarter on quarter decline in the intention to hire temporary staff in the short term.

2.???Job Vacancies

The labour market remains challenging but the high number of vacancies in the UK is decreasing, with economic pressures appearing to impact recruitment decisions.

According to the CIPD, 46% of employers have hard-to-fill vacancies which is slightly down from last quarter (47%). Transport and storage is the sector in which employers are most likely to report hard to fill vacancies, followed by voluntary. Healthcare has risen to the third in the ‘hard to fill’ rankings, up from 8th last quarter.

ONS reports the number of vacancies in the UK was 1,225,000 for the quarter, a decrease of 46,000 on the previous quarter, and quarterly growth fell for the fourth consecutive period.??Education and construction have seen the largest quarterly increases in vacancies, whereas Information & Communication and Accommodation & Food Services have seen the largest falls in vacancies.

The continued fall in the number of vacancies has coincided with an increasing number of respondents citing economic pressures as a factor in decisions to hold back on recruitment, however, the labour market remains challenging.

3.???Labour Supply

The high employment rate is static quarter on quarter as the labour supply remains a challenge for UK employers.

The ONS shows a quarter on quarter decrease in unemployment, an increase in the economic inactivity rate and the employment rate is largely unchanged from the previous quarter. The number of unemployed people per vacancy is at 1.0, unchanged from the previous quarter.

The CIPD reports that the top responses to mitigating recruitment and retention difficulties have been to upskill existing staff (47%), followed by raising pay (44%).

4.???Pay

Pay continues to increase at a high rate, consistent with the tight and competitive labour market. But these significant increases are not keeping up with inflation.

Pay is increasing at a high rate, but at lower than the level of inflation (11.1%). The private sector is increasing at a higher rate (5%) than the public sector (3%).

The CIPD indicates that over one third of employers, that are considering a pay review, are expecting to increase pay. The median expected increase in base pay is 4% across all sectors, which is the highest since the CIPD began recording the data in 2012. The private sector is expecting a 5% median increase, whereas the public sector is anticipating a 3% increase.

More organisations report that they have already increased pay to mitigate recruitment and retention issues (44%), than report that they intend to do so in the future (24%) suggesting that the majority of pay uplifts may have already taken place.

The ONS’ October figures demonstrate a 6% year on year increase in median monthly pay.??Median pay increased most in the finance and insurance sector (10%) and least in Accommodation & Food Services (1%)

If you'd like a copy of the full report, let me know and I'll send it across.