The August Recruitment Markit figures and #ITjobs
Posted on 10th September 2019
The Royal Bank of Scotland Report on Jobs for August shows that, “permanent staff placements contracted for the second time in as many months (and) there were signs that firms were turning to short-term staff to fulfil jobs, as temporary billings rose at the fastest rate in five months, whilst temporary vacancy growth quickened from July.”
In fact, across the economy as a whole, temporary vacancies increased at the fastest pace for ten months in Scotland, although for the UK as a whole there was the softest rise in temporary job vacancies since September 2009.
Of great interest to our clients, and us of course, is the number of candidates available for permanent jobs: here the RBS report shows that this continued to decline in August. This is part of a trend that goes back to March 2012. More pertinently, as Markit/RBS noted, the rate of decline in perm candidate availability “remained sharp overall and marked in the context of historical data.”
There is a similar, continuing picture for temp/contractor candidates, continuing the sequence of deterioration which began in February 2017. Temporary candidate availability also fell across the UK as a whole in August.
On the salary front, permanent salaries rose at their weakest rate since January 2017, while wage rates for contractors/temps in Scotland “increased strongly during the latest survey period, with the rate of inflation in August accelerating from July (and) was above the series long-run average.”
When we turn to IT jobs specifically, it’s clear that our sector continues to grow (see table below), as do almost all of the other seven sectors Markit examines. While the rates of job creation are still increasing, even at a slacker pace, it’s generally assumed by lots of people that the economy is still fundamentally OK.
What’s interesting, and potentially worrying, is that there is a school of thought that this is not in fact the case. Matthew Lynn, writing in the Telegraph’s business pages, suggests that “the relationship between the labour market and the business cycle has started to break down. Why? No one really knows for sure yet.” He offers two potential explanations; one, the “hyper-flexible labour market,” and two, “the rapid development of robotics and artificial intelligence, coupled with the way the really high-growth companies in the app economy employ hardly anyone at all, means that when companies are more confident they are investing their cash in smart machines rather than more people.”
I’m not saying I necessarily agree with Lynn, but it’s an interesting, if somewhat worrying (if correct) hypothesis. You don’t have to be a genius to realise that when he writes, “Some extra staff help the bottom line this quarter, and if you don’t need them any more in a couple of months’ time then it is easy to lay them off again. Freeing up labour markets has been great for job creation, but one consequence we probably didn’t expect was that it may have broken the relationship between the jobs market and the economy” - there is more than a grain of truth in it.
We can but live in the present and try and predict the future. Overall, as the report notes, “while growth in permanent job vacancies was maintained across Scotland in August, the rise lost momentum and was the slowest in over three-and-a-half years.” In other words, amidst the slightly concerning headlines, the number of perm jobs is still growing. Moreover, in our sector, Markit/RBS notes, “IT & Computing topped the permanent staff demand rankings.” When it comes to the temp/contractor market, as noted above, we are seeing substantial growth; a reflection of the trends we’ve seen here at Be-IT, with employers hedging their bets until (if only!) the Brexit debacle in parliament is resolved. Whatever happens, I don’t see that changing in the near future. But then again, there is that little matter of IR35 looming on the not too distant horizon in April 2020. The next few months are going to be interesting…
Gareth Biggerstaff, CEO, Be-IT
Posted in News, Opinion, Recruitment News
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