23 Nov State of the Scottish jobs market – Nov 2020
As we come to the end of November, we can do a bit of reflection on the 2020 jobs market so far as well as start to look forward to 2021 to see what that will have in store for employment and transition prospects for the Armed Forces.
What we’ve seen over 2020 is a generations worth of jobs market change happen virtually overnight. This, unsurprisingly has caused as much of a shock to the economy as the lockdown and subsequent restrictions have. Scotland, like much of the UK’s jobs market, is very much still in recovery phase. But, the situation in different geographic areas and in different industries is hugely varied.
Situation in general
For example, hospitality and leisure are still very much struggling for jobs whereas IT & tech as well as health and social care sectors have continued their huge need for more people to work in them. Even within retail, it is a mixed picture with online retail booming, whereas fixed shops and the high street struggling even more than they were before the pandemic began. Grocery retail and online shopping has boomed too.
Aberdeen has been particularly hard hit as it received a double whammy of COVID and lockdowns that affected everyone, whilst also suffering with a huge drop in the oil price. This meant that job postings in Aberdeen slumped by 75% in comparison to last year. Edinburgh was down 57%, on a par with London. Interestingly though, Dundee actually saw a rise in job postings since the start of lockdown.
The activities of recruitment agencies are also another gauge used to understand what’s happening in the jobs market. Across the UK at the start of March, there were 1.357 million jobs posted per week. At the worst point in lockdown this dropped to 971K at the start of June. Since then, job postings have risen up to around 1.297mn per week. Advertised roles by October were actually ahead of where they were in March.
However, October started to see that rise plateau. This is most likely as that is when we saw the resurgence of COVID rates and the subsequent increase in restrictions to varying extents across the country. Within Scotland, permanent placements declined from March. But September saw the slowest decline, suggesting that this may be about to bottom out. Temporary placements did return to growth in September which was the first month for positive news this year. This indicates that organisations are nervous. They have work but don’t want to commit to permanent roles just yet. The greatest example of this was the grocery retailers took on many new people in spring, particularly to facilitate the surge on online grocery shopping. Incidentally, many of those temp roles went perm as consumers stuck to online grocery shopping.
However, fewer jobs are only one side of the coin. The other side is about the supply of candidates and thus competition for jobs. With the reduction in headcount and increased redundancies from organisations across the country, there are simply more people looking for fewer jobs. Consequently, application rates have soared and average candidates per vacancy numbers have increased too. However, again, this is not evenly spread. In terms of application rates, it jumped a massive 77% in Stirling but only by 8% in Glasgow and these figures change rapidly, making it difficult to draw very focused conclusions.
So what is likely to happen next?
In the immediate term or the remainder of Q4 of 2020 and possibly the early part of Q1 2021, there are several factors which may continue to cause nervousness in the jobs market.
1) On-going COVID restrictions, local lockdowns etc. Huge swathes of western Scotland are currently in Tier 4 and there are likely to be severe restrictions in place in January to counter any relaxation over Christmas.
2) IR35: HMRC have confirmed that changes to IR35 will be implemented in April 2021. This will change contractor ways of working whilst potentially increasing competition for permanent roles as people leave the contractor market.
3) Brexit. Without a clear idea of what’s coming in January, even if by some miracle there is a trade deal, many organisations simply have no idea what will be happening and will hold off investing, including in jobs. However, almost regardless of what the outcome is, the fact there will be an outcome in January will provide something regarding certainty for businesses to plan and act against.
4) Christmas: We will likely see a surge in economic activity which will likely mitigate some of the above factors. The Post Office have already advertised for a record number of seasonal temps, to cope with the forecasted increase in demand in postal and delivery services over the festive period. This will likely be mirrored across the likes of DPD, Yodel, Hermes etc.
Currently, conservative estimates are that the jobs market won’t get back to it’s late 2019 levels until at least 2022. However, with positive news around vaccines, economic “normality” could return a lot quicker. We have seen a huge uptick in the FTSE index since the start of November and if this “confidence” is sustained, we should see the jobs market improve too.
There is a recruitment pattern to be aware of though. Typically, the busiest periods for recruitment are Q2 and Q3. Things commonly slow down during Q4 in the run up to Christmas and it can be quite slow in Q1. If there is a favourable Brexit deal made and if the vaccine trials continue to be positive, it’s likely that recruitment will start pick up later in Q1 then accelerate in Q2 2021. This should hopefully get us back into our normal cycles.
To discuss any of the contents of this brief and your situation specifically, please get in touch with us.