It’s customary in December for analysts in every sector to review the last twelve months and to offer predictions for the next year. Recruitment is no exception, with a raft of forecasts being published in the financial pages of the broadsheets during the past few weeks. Commentators differ in the minutiae of their projections but there is a broad consensus that 2016 will be an exceptional year for the recruitment sector.
The key issue seems to be that the wider economy is expected by both businesses and institutions such as the International Monetary Fund (IMF) and Office for Budget Responsibility (OBR) to experience continued healthy growth over the next year or so. This will prompt many companies to seek to expand their workforce. It is equally reported that several large British businesses are planning to “reshore” certain activities from operations in India, for example, to the United Kingdom. The numbers are not yet available but this is likely to give the jobs market an additional fillip.
There is, however, a corollary to this which may be troubling for some employers; namely that wages will almost certainly be forced upwards. Attracting the best talent is likely to necessitate more generous remuneration packages. Surveys suggest that many workers, notably in the banking and IT sectors, are planning to change jobs next year, with “better pay” being cited as the principle reason for changing employers.
If this migration materialised, it could add a further imperative to increase salaries, either to retain existing staff or attract new ones. Certain companies have expressed fears that the increased costs associated with the National Living Wage (which will come into force in April) will be difficult to absorb. Encouragingly, many of those consulted said that they would seek to recoup their losses through improved productivity but a number did confirm that they would probably consider reducing staffing levels.
Britain’s skills shortage is quoted by many employers as being a major drag on growth and expansion and they say that they are reasonably certain that the problem will only get worse during the coming years. This has a two-fold effect for recruitment. Firstly, employers will need further to inflate the wages available to those candidates who are suitably qualified, and, secondly, they are probably going to seek talent from abroad.
Certainly, numerous organisations state that they plan to introduce enhanced training for staff and there are various Government efforts afoot to improve general education so young people are better equipped with the skills necessary for employment. These projects, however, are costly and will take time to bear fruit so, in the short term, a great many employers will continue to look overseas to employ the staff they need to take their businesses to the next level.
There is, additionally, some uncertainty. Manufacturing, for example, is expected to have a difficult year, with pressures from slowing economies elsewhere and the skills shortage being listed as problems. Experts estimate that the service sector will continue to expand over the coming months but they are cautious about the financial sector, currently one of the jewels in Britain’s commercial crown.
Britain’s tax regime, the regulatory framework and uncertainty over Britain’s membership of the EU are all cited as reasons why some financial institutions may abandon London. HSBC, for example, will announce its headquartering plans in the New Year, with Toronto being widely touted as its probable destination. This sort of development would be a major recruitment game changer.