2019 Review
Our predictions for 2019 were:
- Increased training budgets
- Increased permanent salaries
- Increased numbers of contracting jobs
- Increased reports of skills shortages
- Increased numbers of career contractors moving back into Permanent jobs
Training was certainly on the agenda in 2019. Many companies realising that staff retention is key if they’re going to keep the best people. Training has been on the HR agenda for years yet due to economic circumstances, it’s something tough for businesses to keep pace with the overall demands and expectations on training. Thankfully, 2019 can evidence that increased investment and a steady L&D ship will pay off [https://www.personneltoday.com/hr/ld-budgets-grow-to-facilitate-future-skills-needs/]
2019 also witnessed rapid increases in salaries being offered to permanent members of staff. The cost of paying recruitment fees, inducing new hires, reduced periods of productivity and decreased morale was mitigated in 2019 by increased levels of counter offers and passive candidates gaining confidence in approaching their current employers and asking for increases in wages.
…Real wage growth Regular pay grew by 3.5% (in nominal terms) for permanent and temporary employees in Great Britain, for the period between August–October 2018 and August–October 2019. When considering the change in real terms (i.e. adjusted for CPI), however, regular pay increased by 1.8%. For October 2019, the average regular pay wage, before tax and other deductions, was estimated by ONS at £510 per week in nominal terms. The real-terms figure (at constant 2015 prices) was £472 per week, which is still £1 (0.2%) lower than the pre‑recession peak of £473 per week recorded in April 2008 – reported by REC in December 2019
Last year also saw large numbers of employers having to review their rewards and benefits packages and working arrangements to cater for the needs of new hires. A handful of rapidly growing businesses and those experiencing aggressive growth were required to uplift their salaries to make themselves more desirable in a very competitive marketplace. With the UK now employing more people than ever before, it was key for companies last year to differentiate themselves and elevate themselves in order to be noticed and secure the talent that is in high demand.
Remote working or virtual teams also saw an increase and is growing in both reputation and popularity. As the need for staff grew last year, new thinking was adopted to leverage collaboration tools and adopt greater levels of trust and creativity to ensure talent was secured and projects were delivered.
This model was increasingly used by companies who hired contractors last year, There was an increase in the number of remote working roles offered last year and even some permanent others had offers accommodate elements of flexible working to secure top talent, even if it wasn’t on offer at the beginning of the recruitment process.
Contractors didn’t have all their own way last year, whilst there was a steady and constant demand for contract resource for the first 9 months of 2019, the demand declined towards the end of the year as uncertainty grew over the forthcoming changes to IR35.
…Short-term forecast demand for temporary agency workers remained in positive territory this quarter (Q2) at net: +2, despite falling by 1 percentage point from the previous rolling quarter. However, it remained a notable 12 percentage points lower than the level recorded in the same period last year. The short term forecast demand for temporary agency workers is notably lower in the public sector (net: -16) than in the private sector (net: +13). KPMG
A lack of clarity and miscommunicated information has drastically affected the attitudes towards hiring contractors and blanket decisions have been made in advance of the changes in legislation. These are tricky waters to navigate presently and it will clear up as time passes.
…This quarter, significantly more employers felt that economic conditions were worsening rather than improving. At net: -33, this was up one percentage point from the previous rolling quarter. In contrast, employers’ confidence in making hiring and investment decisions fell by three percentage points to net: -8, the lowest level since REC records began in mid-2016 – REC
Reports in 2019 consistently broadcast the shortage of skills within a number of industries especially Engineering and technology which doesn’t appear to be easing up and will without doubt be affected by the result of Brexit and the potential talent drain which will result from increased numbers of professional seeking work overseas or sought after talent heading back to their lands of origin to find new wealth and help stimulate other parts of the global economy.
Are contractors going back into Permanent employment? There is no data supporting this to date although with many IT based roles being captured by the changes in IR35, time will play its part to reveal the volume of people who jump back into permanent employment to secure improved working rights and benefits.
All in all. You can say we did pretty well to forecast the trends last year; so, we’ll see how we fair this year. Keep posted for our 2020 predictions.