Top 5 Recruitment Sectors for Growth in 2020

Top 5 Recruitment Sectors for Growth in 2020

It’s nearly done.

With the country electing a new government and the new parliament voting by 124 votes in favour of the EU Withdrawal agreement Brexit is almost done and business and the country can start to move forward. Well that’s the theory and really only time will tell but with a majority of 80 MPs we will have a degree of certainty as we all plan for 2020 and a new decade.

So where does that leave us in the recruitment sector?

Well we predicted seven years ago in our hugely popular blog Top 5 Recruitment Sectors to be in for the next 5-10 years the five key sectors for growth and as we start the new decade our views have not changed too much:

Top 5 Recruitment Sectors for next 5-10 years
      1. Information Technology
      2. Engineering
      3. Energy, Oil and Gas
      4. Healthcare
      5. Emerging Technology application

And as we move forward to the economy being a bit more positive in the next twelve months it’s time to look forward to our predictions for next year.

UK & Global Economy

As we reported last year the UK economy has been remarkably resilient over the past eighteen months but there was a sense in the last few months of 2019 that we were in serious danger of entering a recession.

Last year we had predicted GDP growth of 1.2% until Brexit happened with 1.6-1.9% afterwards. As Brexit never happened 1.2% became the reality (as predicted by PWC) but we are hopeful in 2020 that it will rise to the 1.6-1.9% we predicted  last year.

Companies have been holding off investment till the medium term becomes more certain and we believe that the post-elect and Brexit conditions we are moving into fulfil that criteria.

In addition, we have a UK Govt that has committed to significant investment in the UK economy:

    • £100b committed to Infrastructure projects over the next five years
    • An extra £33.9n on the NHS by 2023/24.
    • UK’s 2050 Carbon Neutral Commitment
    • New expenditure in Education and schools/colleges

This coupled with the huge levels of external investment that we hear has been waiting to be invested in capital and property development in the UK we anticipate a significant positive effect on aggregate demand for staff in the UK.

It’s our experience that candidates have been holding off switching careers in significant numbers over the past 6-12 months.  This is typical of previous periods of uncertainty in the late 80s/90s as well as after 911 and also the financial crisis of 2008/9.

Published in June 2019 this timeline shows the dramatic candidate market change that occurred between 2008/9 and 2010/11.

It does not show the continued downward trend in candidate placements that we believe has occurred over the past six months.

Over the next two months don’t be surprised if you start to see surveys that indicate a significant percentage of candidates looking to change jobs in 2020 as this is what we anticipate. In past times this has been as high as 65-75% of staff seeking new careers. All of this is good for recruiters.

Finally the Global economy has received some good news over the past few weeks with the early signs that the US & China are finally reaching a trade agreement that will remove the tariffs that have dampened international trade and subdued markets. This too can only help support the upturn in the UK economy.

In conclusion we believe 2020 will be a good year for the UK recruitment market

The Top 5 Sector outsiders for 2020

We remain a little certain as to how this will dynamic cocktail of political and market forces will play out over Q1/Q2 and so have ranked the following sectors just outside the top five.

Financial Services

The uncertainty of how the final trade agreement between the UK and the EU will shape up will have such a significant impact on this sector so we are not comfortable in forecasting significant return to growth in this sector until at least Q3 – 2020 when hopefully an agreement can be agreed but truth is we do not expect this sector to return to normality until Q1/Q2 – 2021 assuming a UK/EU trade agreement. If that is the case 2021 could be a. great year for Financial Services.

Distribution and Logistics

As this is coming from a strong performance in 2019 again the uncertainty and lack of clarity means we do not see this as being a sector for significant strong growth in 2020. There is still a lack of warehouse capacity in Q4/19 and Q1/20 due to Christmas and Brexit Stockpiling. As this unfolds in Q1/Q2 2020 we expect this sector to return to a degree of normality but with the long-term trend towards internet more shopping there is still growth in this sector. With expected UK government investment in AI and R&D we see the medium term less certain as this sector is ripe for automation.

Public Sector (Excl. Healthcare)

Additional government expenditure in education and the emergency services announced in the Queens speech and the relaxing of the fiscal constraints that have held back investment means we do expect there to be more monies in the public services over the next twelve months though IR35 will hamper temp/contractor growth in this sector and which will lead to further skill-shortages across the sector.

No5 – Energy (incl. Renewables)

The Energy sector seems set for strong growth again in 2020 due to the stable oil price currently more than $10 a barrel above the magic $50 at which investment seems to dwindle. In addition, the key area of growth in this sector is in renewables for reasons we have stated last year in our Top 5 predictions for 2019.

The UK has committed to being carbon neutral by 2050 which means we must continue to invest in Renewable Energy generation and technology. In addition, the EU continues to be committed to carbon reduction targets for 2020 and 2030 which means the continental demand for skills will also not subside despite some of their weaker economic indicators.

In Oct 2019 for the first time in our history electricity from renewable sources rose to 40% of the total generated surpassing fossil fuels for the first time since 1882 since the first fossil fuel plant powered up.  10 years ago, fossil fuels made up 80% of our electricity so this is huge step in our nations quest for carbon neutrality.

Luke Clark, of Renewable UK, told the Guardian recently that the industry hopes to treble the size of its offshore wind sector by 2030 to generate more than a third of the UK’s electricity.

The key statistic for recruiters which is driving demand for staff in this sector is that 566,000 people work in the sector which will need over 221,000 new recruits to fill its expected skills gap by 2027.

This represents a huge skills-gap which creates massive opportunity for recruiters in this sector.

No 4. – Healthcare

With the new government committed to spending and extra £33.9b on the NHS by 2023/24 and the commitment to recruit 31,500 new nurses and an extra 5,000 GPs, creates another huge opportunity for our recruitment agency sector.

Given that the government are hoping to attract a significant number of these from abroad this creates an excellent opening for innovative and creative entrepreneurial recruitment agencies to support the national cause and help find these people.

We would be even more positive about this sector but the recent IR35 rule changes has made this sector less attractive and in fact we are hearing of UK recruitment firms supporting UK trained nurses and doctors making the move abroad to Canada, Australia and the. US.

No 3 – Engineering

Once again, the new government has committed to extra spending. This time £100b on infrastructure projects over the next five years. Excluding those in construction, the projects listed so far include:

  • Full-fibre Broadband
  • Northern Powerhouse
  • Battery Gigafactory
  • National Plug-in Network for Electric Cars
  • Rail and road upgrades
  • HS2, (under review)
  • HS3 potentially

In addition, there is also the third runway at Heathrow, completion of Crossrail, as well as Hinckley and Wylva nuclear power stations that need finishing plus significant rail construction projects.

In addition to this the demographics of the UK engineering market mean that there are a large number of engineers seeking to retire over the next 5-10 years. Annually we need an estimated 203,000 new engineers a year but according to the Institute of Engineering and Technology there is a shortfall of 59,000 graduate engineers in the UK. 

Their recent 2019 Skills and Demand in Industry report published in November 2019 is essential reading for Engineering recruiters that are serious about advising and consulting with their clients.

The report indicated that 53% firms are concerned that a shortage of engineers in the UK is a threat to their business.

The report also highlights that nearly half of companies (48%) report difficulties in respect of the skills available in the external labour market when trying to recruit, with only 20% expecting the supply of engineering and technical skills into industry to improve over the next 3-5 years

This represents a huge opportunity for genuine consulting recruitment agencies to work as trusted partners with your engineering clients to help solve these challenges and build long term and sustainable relationships.

No 2 Information Technology and Technology

 

Technology and IT will be the dominant sector for the foreseeable future due to the Industrial Revolution 4.0.

Moore’s Law which states that computing power doubles every 18 months or so and has been the big driver in the past fifty years. To illustrate this the number of transistors which fit into a microprocessor reached over 10 billion in 2017. It was under 10,000 in 1971. (Source Our world in data)

This rate of growth is slowing but technology is still advancing at a phenomenal rate due to the overall impact of computing power on other sectors. With quantum computers now arriving computing power is set to surge again.

 

Data however is now becoming the new power force that will drive us on to even greater productivity gains. 90% of the data in the world has been created in the past two years, a stat continues to be true year on year. (Source: Forbes magazine)

You will not be surprised to know that in a recent survey by the Royal Society they discovered of the 9.2m job adverts posted in the UK in a twelve month period 10% required data expertise.

So you will not be surprised to learn that Europe needs more 346,000 data scientists. IBM believe that data science will account for 28% of all digital jobs by next year and that these roles stay vacant for 45 days due to the lack of available talent.

“Machine learning, big data and data science skills are the most challenging to recruit for, and can potentially create the greatest disruption if not filled,” according to IBM’s The Quant Crunch report.

For recruiters this represents another huge opportunity to specialise in an expanding market which sees no end to the demand for the foreseeable future.

The other market for which demand appears insatiable is Cyber Security. According to ISC2 in their Cybersecurity Workforce study the global IT Skill shortage exceeds 4m. and in Europe it is 291,000.

Globally there are an estimated 2.93m Cybersecurity professionals including 289,000 in the UK and 805,000 in the US.

The importance of Cybersecurity was brought home to me this year when I was invited to speak on a platform of CIOs at Cisco Live in Barcelona on the Future of Work as well as publishing a blog: Future workforce demands paradigm shift in Talent Management.

 One of the speakers shared with us the statistic that the Global Cisco receive 1.2 trillion security events each day, 7.6 billion DNS requests and 47TB of internet traffic inspected. Whilst these are colossal numbers, I am delighted that Cisco employ a highly sophisticated team backed by the latest AI to protect themselves and us from these attacks.

The scale of these skills gaps in the UK and globally once again provide a huge opportunity for UK recruiters.

Finally if you are keen to learn more about the top 10 technical skills in demand for 2020 then CNBC recently published their Top 10 which includes; Python, React (web), Angular, Machine Learning, Docker, Django, CompTIA, Amazon AWS, Deep Learning and React Native (mobile).

No 1 Construction

For 2020 I am tipping the UK construction sector to be the fastest growing sector of the UK. My reason and logic are simple. In Q3 (and I believe Q4 will be similar) there has been a slowdown in construction sector output.

Recent ONS figure point to a 0.3% contraction in the third quarter but a 2.3% decrease in October alone. Working with several recruitment clients across this sector and in discussion with agency funders and construction material providers it is clear that Q4 has continued the downward trend. The REC/KPMG Jobs report published in December quoted demand for construction staff as showing a “marked fall in demand for temp staff.”

The reasons for this was political and economic uncertainty caused by the delays over Brexit, the general election and a lack of inward investment couple with a reluctance of developers to commence projects.

The great news is this uncertainty is over. Whatever your personal political views what is clear is that we have now clarity on Brexit and a stable government so the noises are positive. Already I am hearing of significant increases in demand for both construction staff and materials orders for January 2020. It is highly likely that we will see a shortage of roofing materials and bricks again as we approach the middle of 2020 so expect builders to start work early.

In addition to the release of this pent-up demand the new UK Government has committed to spending huge amounts of money on construction infrastructure some of which will be in £100b we mentioned earlier under engineering. In addition to construction projects already mentioned the government has committed to building 1m new homes over the next five years. So far in 2018/19 240,000 houses have been built. This is the highest figure for over 30 years and shows the government’s commitment to solve the housing crisis that has blighted the UK for over a decade now. Whilst there remain issues over green-belt usage with an 80 MP majority the government should have the political resolve to tackle this.

In 2020 we expect the demand for construction staff to rise rapidly from Q1 to Q2. With Brexit and the return of many foreign workers back to continental Europe there is going to be a critical skills shortage. According to the ONS 8% of the UK Construction workforce of 3m are from the EU. This will put undoubted pressure on rates and see many construction firms struggling to complete projects.

The final factor which is affecting the demand for staff is the rapidly ageing construction workforce. Over 20% of tradespeople are over 50 with 15% over 60. This is quite a worry as we embark on a decade of growth and infrastructure expansion.

There is more good news for Construction recruiters as wage growth between 2018-19 rose 8.5% well above the national average due to demand for staff and skill shortages.

We expect the following to be the most critical skill shortages:

    • Brick Layers
    • Electricians
    • Scaffolders
    • Tele-Handlers, 360 and dumper drivers
    • Quantity Surveyors
    • Site Managers
    • Ground Workers

Our advice to all our construction agency clients is secure your workers as in 2020 those that have the workers will be the winners in this battle for skilled labour.

IR35 The Curved Ball

We are delighted to hear that the new government has promised to review the intended changes to the way the HMRC operate IR35 that are proposed to take effect in April. At a time when the government is seeking to inject some growth into the economy and launch a programme of capital expenditure and infrastructure upgrade we need as many of the professional engineering, technology and construction skills Britain is famed for. With the huge global skills gaps outlined already it would be potential suicide to give impetus to the growing trend of our workers to travel abroad.

Already there are large recruitment initiatives being launched by Middle East construction firms to raid the UK for skills. Many of the US and Canadian firms are eyeing the opportunities to temp our workers to North America and let’s not delude ourselves our EU partners also see the rich picking that can be made from poaching our skilled workforce.

The IR35 effect on our predictions could hugely impact our forecasts should the UK government carry on with the implementation  though with the Construction Industry Scheme (CIS) this should see many workers staying here but our Engineering, IT and Energy workers will be tempted to leave our shores for the 30-50% premiums they will be able to make even after expenses from working outside the UK.

2020 Outlook

We are extremely positive for 2020 and look forward to further reflections as the year progresses. We would however be delighted to hear your thoughts too.

Copyright Selling Success 2019

 

 

Top 5 Recruitment Sectors to be in for next 5-10 years

Top 5 Recruitment Sectors to be in for next 5-10 years

With unemployment typically running at 8-11% across the developed economies of the world it seems bizarre to be talking about skills shortages but that is the reality of the world today.

In last weeks blog ‘Can we win the Global Talent War’ I mentioned the five:

  • Information Technology
  • Engineering
  • Energy, Oil and Gas
  • Healthcare
  • Emerging Technology application

This week I go into detail about why these sectors are the ones to be in.

Information Technology

At CeBIT in Hannover Germany last week, Neelie Kroes told delegate’s that the EUs competitiveness is under threat unless we can fill the gap in the regions IT Skills Shortages. The EU have launched a ‘grand coalition’ to address the regions issues.cebit

 

In addition in last weeks article on the CeBIT event the BBC reported:

The (EU) commission’s own figures suggested that there will be 900,000 vacancies for IT-related roles by 2015. There are currently about 26 million people unemployed across Europe. The number of “digital jobs” – jobs based around IT – is growing by about 100,000 every year, yet the number of skilled IT graduates is failing to keep pace.

IT is the fashion industry of business. Whilst financial practices change slowly and evolve at a gentle pace rather than being abolished, IT in business is obsolete inside five years and the people who design, build and maintain our complex IT architecture find their skills similarly redundant too.

In my 24 years in IT recruitment I was asked many times ‘how should I guarantee my employment? For many years I have responded in the same way, as there is no company that can guarantee continuous employment for all its employees forever.

‘If you wish to remain in employment you must take ownership of your own career and ensure you remain current with all the latest technologies in your core sector.’

IT is constantly changing and consequently it renews itself every 5-10 years.

Likewise so do its workers if they wish to remain employed.

As a result of these shortages many of my agency clients, despite the recession, see an increasing need for their services and all have growing sales lines. I see no end to this for the foreseeable future unless the need by business to adopt the latest technology diminishes radically.

Engineering

Last year a study Jobs and growth: the importance of engineering skills to the economy by the Royal Academy of Engineering found that British industry needs 100,000 new graduates in Science, technology, engineering and mathematics until 2020. In total that’s 830,000 professionals and 450,000 technicians.

They found nuclear new build and automotive manufacture as key areas and are predicting a 15% premium compared to UK averages salaries. Those that follow my ‘Greenshoots’ Newsfeeds and tweets will know that automotive has been a key growth area with Nissan, Land Rover Jaguar, BMW and many others all announcing a growth in jobs. With the HS2 Project due to kick off too, this will create further growth in this sector.

In January Sir James Dyson, the inventor, warned of a deficit of 60,000 engineering graduates this year and argued: “The government must do more to attract the brightest and best into engineering and science so that we can compete internationally. “Twenty-six per cent of engineering graduates do not go into engineering or technical professions,” he told the Radio Times. “More worrying is that 85 per cent of all engineering and science postgraduates in our universities come from outside the UK. Yet nine in 10 leave the UK after they finish their studies.”

Clearly all these reports on the engineering sector are collectively projecting skills gaps well into the 2020’s. This too is a key area to grow in.

Energy, Oil & Gas

In a way Energy, Oil & Gas are a subset of Engineering but need to be considered a sector in their own right. The global economy is demanding increased energy production and this drive is forcing greater and greater demand for the engineers to source, design and build the oil, gas and energy extraction and generating complexes. Besides traditional sectors of oil and gas exploration and production, the quest for renewables seems to be gathering a pace here in the UK.

To put the scale of this into context the Lloyds Banking group recently found that oil and gas firms could create up to 34,000 jobs over the next two years. Stuart

While, area director of Lloyds Bank Commercial Banking north of Scotland, said “The 100 companies we surveyed have committed to creating 5,000 jobs, which, if replicated across the industry, would see tens of thousands of jobs created over the next two years.”

Again if you track my ‘Greenshoots – 1000 new jobs created in North Sea’ news feeds in recent weeks you will see them all littered with Oil, Gas and renewable energy projects that have been announced. Only last week Aker Solutions announced a new contract from BP which will see 500 additional jobs on top of the company’s 1,500 already announced here in the UK.

Healthcare

NHS NursesThe drivers behind the demand for healthcare professionals is our globally aging population which poses considerable threat to the world economy over the next 20 to 50 years.

 

As we reported in this weeks March Greenshoots the Nottingham office of Home Instead Senior Care found this week care is not an attractive profession for many and they have been struggling to recruit 40 care workers company. Nevertheless the demand for skills in this sector is set to boom and there appears no end in sight.

The only issue is can we attract the people to work in this highly demanding sector.

 

Emerging Technology Applications

 

As technology advances the application of this to every business is going to create and generate new jobs and skills for which there is a very small supply base.

It is debateable whether these will be IT or engineering jobs. Certainly there will be many in these sectors but technology and mobile technology particularly is starting to pervade the whole of our lives from in-car systems, to domestic climate control systems to intelligent hi-fi to the whole tablet, smartphone industry, which now enables retailers, suppliers and businesses generally to create totally new ways of delivering services to us.

telehealth-remote-kit-btFrom Tele-health that enables patients to be treated for many illnesses at home to iPhone apps that enable us to purchase things on the move, business is changing and the skills and people required to keep businesses ahead of their competitors are going to be highly sort after.

 

Only recently a Computerworld survey indicated that 60% of IT executives plan to hire app developers in 2013.

I’m sure other vibrant sectors will materialise as we emerge out of our worldwide recession and the skills shortages discussed in my blog Third World War begins Now – Recruitment Agencies Mercenaries or Allies? start to bite.

It defies logic that with Europe facing a skill shortage of 23 million by 2020 and China and incredible 140m by 2030, recruitment agencies will not have a key role to play.

Graduates

If you have children considering university then clearly these are the sectors to go for but Graduates in Cap and Gownwith the average student debt tipped to reach £50,000 by 2015 when the new student fees hit, you can understand why fresh graduates will look globally rather than in the UK when seeking careers.

Personally I remain convinced that UK Plc. does not have this policy right so watch this space.