The UK economy is beginning to see positive signs of a return to normality in some form. Latest labour market data from the Office for National Statistics (ONS) shows positive trends across employment numbers, with the employment rate increasing 0.2 percentage points in quarter one this year. Unemployment levels also improved, averaging 4.8% between January and March, down 0.3% from Q4 last year.

At the beginning of May, the Bank of England also raised its estimate for UK GDP growth to 7.25% in 2021 – over 2% higher than initial forecasts from February. This optimism is driving both an increase in general recruitment activity and demand for internal recruitment professionals. We just have to take a look at the Total Jobs website to see that demand for in-house staffing teams is high, with over 7,000 vacancies currently being advertised as employers look to bolster recruitment teams to support an expected uptick in hiring over the coming months.

However, while we’re seeing increased hiring of in-house recruiters, our latest data is also showing a spike in the use of professional staffing companies – a trend that we expect to continue as skills shortages and the war for talent begin to return.

Staffing companies reporting increased demand
According to data provided by growth analytics expert, cube19, for our latest Recruitment Trends Snapshot report, professional recruitment businesses have reported a significant spike in year-on-year vacancy and placement figures as the UK gets back to business and we gradually emerge from a year of stop / start lockdowns.

The statistics show a 90% uptick in permanent vacancies with contract roles increasing 83%. Placements were also up by similarly impressive levels, with permanent placement numbers up 82% when compared to April 2020. Contract assignments also rose, reporting a 68% increase for the same period.

The April data did show a slight month on month dip, which is to be expected after the initial flurry of activity in March – a common trend as we approached both the end of the tax year and many organisations’ year ends as headcount budgets expired.

As Joe McGuire, Chief Revenue Officer at cube19 commented in the report: “The YoY trends pre-pandemic show that the numbers in April tend to be slightly down on March. That said, April continued to show positive signs in the recovery and with further easing of restrictions in May paired with strong growth projections for the rest of the year, we hope to see this continue.”

The value of expert partnerships
While this data showcases a positive commitment to skills investment following a year of restricted recruitment budgets for HR teams, it also indicates that employers are, rather encouragingly, continuing to see the importance of the professional recruitment sector as partners in their plans to upskill for the recovery.

Although there are arguably more candidates in the market at the moment, finding the right talent is still a challenge, not only for historically skill short sectors, but also across those areas that have been hit hard by the pandemic. As a case in point, we’re already seeing reports of hospitality and retail struggling to source the people they need to re-open on a significant scale.

According to the latest data from the world’s largest network of job boards, Broadbean Technology,

vacancies in hospitality spiked 77% month-on-month in April as the feasibility of Covid-restrictions being eased began to be realised. However, the number of applicants per vacancy fell 62% month-month for hospitality roles, with an average of just 19 applications submitted for each role. According to Alex Fourlis, Managing Director at Broadbean Technology, this is likely a side-effect of both the uncertain future of hospitality causing talent to exit the sector and a result of Brexit:

“Understandably, a number of individuals have chosen to exit the sector as work dried up and businesses now face the challenge of enticing them back. Perhaps more concerningly, though, this drop in applications follows the UK’s exit from the EU and potentially suggests that Brexit has had a long-lasting impact on hospitality.”

The impact of Brexit on talent pools is a particular concern that is leading to more employers turning to outsourced recruitment experts. While the pandemic has arguably delayed the full impact, with border closure preventing international talent attraction for some time, as the traffic light travel system continues to be rolled out, the full effects will soon be more notable. For skill short sectors that have had to rely on international talent, staff shortages are a very real threat right now – one that will require expert support to address.

The roll out of IR35 is also having an impact on areas that have a high-level of dependency on contingent workforces. Sectors such as technology and IT that often turn to contractors to fill skills gaps are likely to soon feel the effects of off-payroll, with some individuals already choosing to move ‘in-house’.

This will only exacerbate skills shortages at a time when vacancies are growing. In fact, recent data from business intelligence specialist, Vacancysoft, shows that professional IT vacancies are already increasing, reportedly up 71.7% in Q1 2021 when compared to the same period last year. Sourcing enough candidates to fill these roles has been a challenge for some time now, and with the impact of both Brexit and IR35 playing out across the UK, talent acquisition teams will need more than just extra in-house resources to fill skills gaps. They’ll need expert partners with the knowledge of wider talent markets to help not only engage those passive candidates that are highly sought after, but also provide strategic advice on how skills gaps can be filled.