There is no question that COVID-19 has had a negative impact on the recruitment industry and while some sectors like logistics, medical and IT are maintaining demand, others, like hospitality, have suffered.
This current situation will not continue forever, so what is the recovery going to look like for recruitment? Is this the catalyst the industry needed to streamline and improve? We tuned into webinars with James Caan (CEO of Hamilton Bradshaw) and Neil Carberry (CEO of REC) to find out their predictions for the recruitment market post COVID-19.
The current situation
Just prior to the lockdown measures being announced on the 16th March 2020, unemployment figures had hit a new low of 3.9% and Rishi Sunak had hailed a “national job miracle”.
Following the lockdown measures, huge numbers of temporary positions were cancelled and companies imposed a recruitment freeze overnight. These decisions by businesses saw a fall in demand from almost all sectors within recruitment.
Whilst we will not have the updated unemployment figures from the Office of National Statistics (ONS) until around June, some economists predict that unemployment figures could rise to over 5% in April and others have estimated that we could be looking at figures similar to those of the 2008 financial crisis.
But while recruitment figures have been predictably low, recent Indeed statistics have shown that the decline in new jobs being advertised has slowly started to level off, with some recruiters claiming that there are a few jobs being advertised again on the jobs markets.
While some economists have been pessimistic about the UK economy post COVID-19, many others have pointed out that the nature of this economic downturn is distinctly different from anything we have experienced before. The UK labour market may recover quicker than in previous recessions, as we have not had the typical slow economic downturn that leads to a recession and once businesses are allowed to operate, they will be looking to fill the labour gap quickly.
New data has suggested that some sectors have already started going back to work despite the green light for construction yesterday. There has been £10 billion of work on building sites restarted last week according to Barbour. Also there has been a huge increase in demand by many supermarkets, who are looking for tens of thousands of temporary workers. Whilst this situation with the supermarkets may be temporary (though it could last for up to a year), it will still help the UK economy.
Many people are coming together to support each other, and a good example of this is the Keep Britain Working campaign, chaired by the CEO of Reed, which is being endorsed by several high-profile business leaders such as James Timpson.
As we get closer to lockdown being lifted in stages and businesses opening back up, what actions should recruiters take now?
What should recruiters be doing now?
In terms of what recruitment businesses can do now, Neil Carberry recommends that the first step would be to understand how much cash is available, as well as what the key decision points are within the business. This will allow recruitment businesses to plan financially for the future and spread their resources.
He also suggests that recruitment agencies take full advantage of the government schemes available to them, including furlough for non-essential staff and government backed loan schemes in place to borrow money in order to get through this difficult time. In the meantime, the government is working on bringing out more schemes to support small and medium sized businesses.
However, many have pointed out that there are flaws with the government schemes currently available. Since lockdown began, applications for universal credit benefit have shot up drastically, indicating that the UK is still suffering job losses. Businesses are concerned about the long term future, problems with their cash flow and some are unsure of eligibility of the schemes. This has resulted in some staff being made redundant. This view is supported by a study by the ONS, which said that more than a quarter of businesses they surveyed said they were cutting staff levels in the short term.
Aside from taking advantage of these government schemes, the experts have strongly advised that now is a good time for recruiters to build their USP, understand their market and work on long-term relationships, which will be key to recovery. Even though finding demand right now will be hard, getting close to clients will allow recruiters to understand where there is potential for growth in the future. Many recruiters have much more time to network heavily (there are a lot of resources out there to help engage and build networks) with the aim of networking to convince hirers to plan for the future and interview the best candidates now before another hirer snaps them up.
This period can also be a good time to cut costs, although James Caan pointed out that there is a fine line between cutting costs and keeping the business going. Business leaders will have to make practical decisions based on facts as well as future predictions and not previous experiences. Agencies need to look at what is financially viable and who is strong in sales so brings in revenue. Analysing which members of the team add value to the business will allow businesses to remove unproductive workers, streamline operations and the agency will grow.
Future of recruitment post corona
The recruitment industry is likely to begin to see a return to activity sector by sector, starting in late May / early June, according to Neil Carberry. However whilst this return to work will initially be slow, he predicts within a few months recruitment will pick up at some speed. Neil believes that the main growth areas over the next 12-18 months will be logistics, healthcare, IT/tech and financial services/insurance. James Caan has predicted that as employers build confidence, we will start to see a rise in temporary and fixed-term roles becoming available in the first 6 months after lockdown ends. This may be helped by the recent postponement of the IR35 changes, which means that there are more contractors and gig economy workers, than previously predicted, available to help fill the holes that have been left by COVID-19.
Arguably one positive that has come out of the COVID-19 situation is that it has forced recruitment businesses to innovate the way that they approach recruitment. Recruiters should use this time to review their current ways of working, invest in changes, potentially revolutionise their working behaviours and most importantly connect with their clients.
The future of the recruiter will be different to what it is now. We are likely to see them taking on more consultative and advisory working practices as they help hirers recover from the current situation. Recruiters will spend more time on added value and client planning, as well as making the process more digital.
With all of these changes, we believe that it is unlikely that the recruitment industry will return to what it was. Recruiters should try and understand as well as embrace with passion the new normal. Neil Carberry predicts that some businesses who cannot adapt will not come back, while others with good connections and a very strong USP will survive.
We are also likely to see working from home becoming the new norm, which in turn is likely to see companies looking for smaller offices, which will in turn cut rental costs. Neil Carberry has stated he is likely to look for a smaller office space in the future. James Caan says that a lot of his staff work remotely at least part of the week, and that this has had a positive impact on productivity.
In terms of being efficient while working remotely, James Caan recommends that recruiters make the most of technology like Zoom and WhatsApp both to interview candidates and to contact team members. Strong structure and communication will enable remote workers to be productive and contribute to the functioning of the business. He also recommends dressing in work clothing (no PJS – sorry!) to make employees feel less casual and to create a routine.
Those who make it through this pandemic will likely have many more opportunities, with a larger talent pool and more demand as the economy recovers. James Caan supports this prediction and has stated that when the recruitment market does recover it will bounce back quickly and this may in fact create more opportunities for businesses who take full advantage of the recovery. We can all learn some important lessons from this tough situation and come out stronger on the other side. Further, he said that some of the best decisions he made came out of financial crisis and business leaders must push past their fear.
All in all, we believe that the future will be great for recruitment agencies.