Pro’s and Con’s of a Candidate Led Market
We are currently in a Candidate Led Market for the UK’s Technical Sectors. With vast skills shortages and, with uncertainty surrounding Brexit and its long-term implications, this will undoubtedly impact the recruitment sector. But what are the Pro’s and Con’s of a candidate led market?
Firstly: What’s the key difference between a Candidate led and a Client led Market?
In essence it’s supply and demand. The supply is the candidates and the demand is the clients. Currently there is too much demand (client vacancies) and not enough supply (skilled candidates). But is that the case in all technical recruitment sub-sectors?
Not necessarily. We operate in 3x Technical Sub-sectors; Engineering, IT and Science. All have talent supply issues from a generalist viewpoint, but IT particularly suffers from huge skills shortages.
Interestingly though Total Jobs (which also lists statistics for CW jobs who are arguably the largest UK IT job board specialist) list only 8149 IT vacancies. Engineering dwarfs this with 23,370 and that doesn’t factor in the other 24,000 plus engineering related industries such as manufacturing and FMCG.
This raises another question
Despite there being lesser supply to meet the demand in IT, are the Engineering related sectors more of a major issue as there are so many more vacancies there by a ratio of around 5 to 1? From a purely economic standpoint that is a significantly higher impact per unfilled vacancy.
But to answer the question of whether there are skills shortages in all technical recruitment sub-sectors there are those that fair well in the current market.
Take Renewables for example. Everyone from graduates to experienced engineers seeking a career change seem to revere in the opportunity to enter the renewables market. The problem is though that despite its innovations, green benefits and ethical ideals many of the venture capitalist backed renewable energy firms over the last few years have gone bust.
There isn’t therefore the urgent demand in the renewables market that we see in IT for example. Despite it being a tech-centric market, only niche sections of the industry have trouble finding people.
Renewables are just one of a very few sub-sectors of Technical based industries in the UK that aren’t suffering the critical challenges of the current candidate led market.
Surely a candidate led market is a good thing for the recruitment sector?
It is, in that it drives demand for recruitment companies. However, it means that there are a lot of recruitment organisations out there. The current trend word for this, as there always seems to be one, is “noise”. Yes, there is a lot of “noise” in the recruitment market and despite my trivial disdain for yet another Buzzword, I agree that this can also be seen as a negative.
I personally pay little attention to the volume of recruitment competition out there as it has been the same for years and prefer to concentrate on the quality and results our service delivers. Yes, it means getting a shot with some potential clients can be more challenging, but if you relentlessly strive to create opportunities you’ll get chances. It is those that take their chances that see their businesses grow because results speak for themselves.
What about the challenges of finding the talent to meet demand?
Without giving away our specific tactics, embracing new technologies, continuous improvements including experimental trials and an unyielding hunt to deliver results will begin to bear fruit. Traditional and basic recruitment methodologies that ignore utilising technologies are destined to limit potential results. They will still work for the time being, but with AI and Machine learning rapidly altering the recruitment landscape a more forward thinking approach is required.
Is the problem compounded by client expectations?
The story of the boy who cried wolf is a useful analogy to answer this. Long has it been that recruiters attempting to justify their fees and the excellence of their services have played on a challenging market as a form of validation. Whilst this sales technique used to lure new clients, it wavered in its effectiveness through chronic overuse.
The problem now though is that it genuinely is a challenging market. But many clients are still unaware of quite how much so and due to being oversold the problem in the past and indeed the present are understandably sceptical of the same old story.
It isn’t rare for clients to not only underestimate the market challenges, but also the salaries required to secure people. On many occasions there is a complete disconnect between salaries on offer and skills necessitated.
What effect could Brexit have on the UK’s skills shortages?
Presuming there is a cap or stoppage of skilled foreign labour, this will obviously squeeze the talent pool tighter. Some may argue that this will help British workers get the jobs that foreign talent was taking. Not to be the bringer of bad news, but the volume of talent required to meet demand isn’t in Britain in the first place, hence why there was so much immigration. Simply cutting the foreign talent supply option is like sticking pins in your water balloon. Yes, that water balloon is a lot larger in scale than those you’re thinking of, but it means less and less talent over time without something changing.
I wrote a post on Brexit and the recruitment industry so will only touch on it here: https://revorec.com/how-brexit-will-affect-recruitment-in-the-uk/
However, Brexit goes, unless you keep the immigration doors open and appealing to foreign talent, you will inevitably have a detrimental and compounding impact on the UK skills shortages.
As Brexit is happening anyway is there another solution?
Over 40% of the UK’s population has a degree, but according to a recent study 50% of the UK’s workforce believes that they are in jobs that they are either overqualified or underqualified to do. We have a 4% UK unemployment rate and that is the lowest figure in 43 years.
https://tradingeconomics.com/united-kingdom/unemployment-rate
With 96% of the UK’s possible workforce in employment and 50% claiming they are in the wrong jobs for their skillset we have an exponential problem. There is already a chronic skills shortage, Brexit will inevitably have a negative impact on the influx of foreign talent, we have less available people out of work than in over 4 decades and half of them are in the wrong jobs anyway. What a mess.
Let’s break down the cause of each problem to try to find a plausible solution.
1-Chronic Skills Shortages
I’ve written a post specifically on this: https://revorec.com/the-increasing-uk-skills-shortage-causes-and-solutions/
With a chronic skill shortage in the UK this has increased continuously over the last couple of decades with a pair of recessions giving a temporary respite. Interestingly during the same period, the amount of university graduates has increased at a similar rate.
If more people are completing higher education shouldn’t this solve the skills shortage problem?
No. If you compare university graduate increases to the trend in people believing themselves to be overqualified for jobs you’ll again see a similar pattern emerge. Put simply too many people are gaining degrees that there is not enough demand to warrant. Hence why so many degree qualified people are doing jobs well below their skillsets.
The choice of degrees is also a point to consider.
The 5 most popular degree area’s include Medicine, Business, Biological Sciences, Social Sciences and Art & Design. The 5 least popular degree areas include Veterinary Science, Agriculture, Architecture & Building, Computer Science and Mathematics.
None of the 5 most popular degree subjects fall into Engineering or IT directly. But three of the five least popular subject areas are directly attributed to Engineering and IT.
We have Baby Boomers who entered the industry via apprenticeships. This was common place in years gone by, but those people are now approaching retirement age. We have an increasing demand on Engineering and IT due to technical advances. But we have less people studying the subjects related to this to replace the depleting skillsets.
The solution is that more people need to study the areas of demand and more companies need to be willing to train them. But can you force someone to study something they don’t want to? Or can you strong arm companies to spend time and money on training they don’t choose to deliver? Arguably there’s a catch 22.
The government need to offer incentives for people to train in these areas such as subsidised degrees. Companies need to be willing to cross train people with transferable skills. We need a dedicated UK program and sizeable budget behind it because it will have serious implications moving forward otherwise.
2-Brexit’s impact
Having already covered this, to summarise, Brexit will simply add limitations on skilled migrants filling the gaps. In my opinion that will be a compounding problem. We need a structured and simple skilled immigration policy. One that makes it easy and appealing for foreign talent to come to the UK. To make it work though the bureaucrats need to be held off.
3-Less available people out of work
This is a good thing, but it’s not encouraging people to retrain in other areas. If you already have a job and have a sizeable list of bills including absurd rental costs, where is the time or money to start retraining?
You need more people in the country to fix this. Without the government doing something drastically controversial such as banning contraception and incentivising large families this is a difficult one to solve.
4-People in the wrong jobs for their skillset
If you’re a graduate who is overqualified in your job, you’ve got 40k of debt to add to the above figure, whatever that may be.
On the other hand, if you’re underqualified you’ll need the training. Are companies willing to deliver on that? With staff retention at a record low based on job tenure why would an employer want to spend time and money on training people who are likely to leave months later?
Companies need to become better employers and the market would need to be more client led to make that happen.
What are the pro’s of a candidate led market?
For recruiters this is great. There is more demand and unless there is a recession where companies stop hiring, which would only be temporary, this will only continue.
If you’re a talented candidate take your pick of the best jobs. And if you take one you don’t like there’s a seemingly endless number of others to move into.
What are the con’s of a candidate led market?
Candidate led markets should be a temporary blip, not an accelerating problem. To remain diplomatic, I appreciate both arguments of Brexit. But the logic of how this will help the UK from an economic standpoint considering the already excessive skill shortages we have are beyond me.
The demand is a pro, but if it causes companies to go to the wall as they cannot fulfill contracts or have the workforce to provide a product or service, that will reduce where the demand is coming from.
We are seeing expats leaving the UK for Australia, Singapore, Hong Kong, Dubai etc. This will increase and companies will adapt and focus our operations where the demand is as will other UK firms. If this means moving our business out of the UK, so be it.
Conclusion
A candidate led market is only good for as long as the demand exists. If the UK fails to replenish the skills shortages it will drive companies requiring these skills either out of business or out of the UK. In the short term this is a headache, but long term it could cause much more serious issues.
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