Top Recruitment Sectors for Growth in 2017

It’s here again, our popular annual blog that looks into the future and predicts the recruitment sectors that are geared for high growth in 2017.

2016 has seen some dramatic changes in the World. The UK voting for Brexit and the US voting for Donald Trump have seen a huge shift towards populist voting and a rejection of the establishment and globalisation. With general election in France, Netherlands and Germany in 2017 its difficult to predict what the future will hold.

So against this background this years predictions have been particularly fraught with challenge and some might even say they are courageous.

UK and Global Economic Dynamics

In making our predictions this year we believe it is important to state how we see the UK and World economies behaving as this will temper any forecasts.

As I write this blog the UK is projecting 2.2-2.4% growth in 2016, which is pretty much what was being projected last year. In fact this weeks Purchasing Managers Index (PMI) for the services sector is very robust and there is every likelihood that the UK will top the economic growth league amongst the G7 countries.

No small feat for an economy that everyone was writing off after Brexit.

After a fourth consecutive month of growth most importantly for the Recruitment Sector Chris Williamson, chief business economist at IHS Markit states:

“Employment is rising at one of the fastest rates seen over the past five years. Employers’ appetite to hire is being whetted by a further accumulation of unfinished work. Backlogs of uncompleted orders showed the largest rise for five-and-a-half years.”

Next year we remain optimistic and expect the UK economy to grow at 1.6-2.0%. Even as we go to press on our blog the economic picture is changing. Only recently the Bank of England upgraded its forecast for the UK to 1.4% and we have still to factor in the “Trump-effect”. Commentators are mixed on this but given his personal heritage with a Scottish mother and significant business interests in the UK we are optimistic that on balance “Trump” will be good for UK economic prospects in the short to medium term if not the world in general.

The final dynamic we believe will impact our world in 2017 is the recent agreement by OPEC and Non-OPEC countries to limit oil production in 2017 and beyond. This has already seen oil prices rise. The UK is an oil producing country and as such this should overall have a positive effect on our economy.

As we look into the next decade the picture is less clear. Artificial Intelligence, Big Data and Robotics (Bots) are set to change the world of employment and by definition the world of recruitment beyond all recognition

It has been described as the “disruptive tidal wave of technology” and you might wish to read our full forecast to help you decide if you are going to be a winner or loser.

 

Top five Sectors for high growth in 2017

 

No. 5 Accounting & Finance

In any economic downturn the demand for accountants and company financial experts rises. That’s my experience and whilst I doubt we will have a recession in 2017, there is no doubt going to be some economic challenges and a shift in corporate dynamics in the next few years to the end of the decade.

Brexit will require large numbers of businesses to make changes to their business and accounting practices. There will be further examination of cost and profit models that businesses operate. This is against the backdrop of rising long term demand for accountants which is caused by the large numbers of baby-boomer accountants retiring from business and more especially in the public sector where there is a small crisis developing.

Finally the other market factor, which is fuelling the rising demand for corporate IPO and finance experts, is caused by the attractiveness of UK businesses to foreign investment. The 15% reduction in the value of the pound post Brexit has suddenly seen a rise in foreign interest in UK companies. The number of mergers and acquisitions are set to rise in 2017 and this will fuel the demand for individuals with corporate finance expertise in this arena.

Ultra Niche Hot Spot predictions

M&A Specialists, Project Managers (Accounting skill-sets), Commercial Accountants, Project/Systems Accountants

 

No. 4 Oil, Gas and Energy

This sector has seen a downturn in the previous years projections but with the UK Government endorsement of the Hinkley Point C and Wylva Nuclear Power Stations projects plus the OPEC agreement with Non-OPEC countries to limit production also seeing an oil price rise there is a renewed confidence in many parts of the industry. The magic number is $70 a barrel above which the major oil exploration companies feel confident to speculate on developing potential fields.

In 2017 we expect the $70 a barrel level to be achieved but even before that we are already seeing some RFIs and tenders coming out by firms speculating on an up turn and looking to take advantage of the excess capacity in the industry and hopefully achieve some good sub-contract rates. With this in mind this we believe there will be a healthy rise in demand for people in this sector during Q3 and Q4 2017.

The significantly ageing workforce in Nuclear is likely to create a major skill-shortage here. Currently whilst demand for staff is high the large MSP contract providers that dominate this market are operating at margins that are almost unsustainable for SME agencies, especially when you factor in the cost of finance. It will be fascinating to see what will give first but as the public sector (education and NHS) have found you can’t buck the market for ever. This market seems ripe for niche recruiters to exploit these large skills gaps but we will have to see if this happens.

Our guess is that towards the end of 2017 we will see the dam burst and rates and margins rise as the fight for critical staff breaks out into all out war in some niche sectors.

 

Ultra Niche Hot Spot predictions

System Design Engineers, (Nuclear and Oil & Gas) Mechanical Design Engineers (Nuclear and Oil & Gas), Electrical Design Engineers (Nuclear and Oil & Gas), Project Managers (Nuclear and Oil & Gas) Systems Control Engineers (Nuclear and Oil & Gas).

 

No. 3 Construction

In 2016 we predicted this sector to rise and many recruitment businesses have seen solid growth this year but sadly not the levels we had all wished for. As we indicated the politics of releasing funds and capital flows to enable the huge growth in house building did not happen.

Sadly we do not see the seismic shift that is required in the financial markets to affect the large growth in private sector house building that is still required without a government policy shift.

Yes the government has committed £5 billion to boost the housing building but there is also the market factor that a huge growth in property completions will see prices stabilise if not fall and turkeys as they say don’t vote for Christmas and property developers and builders don’t vote for price falls either. The signs are encouraging in that there has been a growth in domestic building in Q3 but nowhere near the levels the government needs in order to achieve its target of 200,000 new builds a year..

The sectors skills gaps are well documented. In fact there is a fear that BREXIT will lead to thousands of EU nationals who have been plugging those gaps returning to mainland Europe leaving us under-resourced. It was reported in the Telegraph earlier this year that “Tony Pidgley, the chairman of house builder Berkeley homes has spoken out, warning of Brexit’s impact on construction workers, and pointed out that 50pc of his subcontractors are from Eastern Europe.”

This represents 23pc of workers in London. The article also claims that the construction sector needs to attract 500,000 new recruits in the next five years to plug the skill gap. Failure to achieve this will see house building drop from the 140,000 a year we are currently achieving to 100,000 a year and certainly nowhere the 200,000 a year the government wish to secure.

So agencies if you have the workers and can retain them then you should be able to make good margins in 2017-18

The significant number of infrastructure projects that the government has committed to since BREXIT (including New runway Heathrow, HS2 Phase Two) which were reinforced in the 2016 Autumn Statement, only goes to increase the demand for skills and ensures this will be a healthy sector in 2017.

Inequalities between agencies

What we are seeing however is that agencies that work with traditional generalist operating models (which are not worker centric) are not making the most of these growth opportunities. They are at best achieving 5-10% p.a. growth rates and in some cases less than that, whilst those with modern, ultra-niche models that put the focus on worker relationships are achieving 200-300% growth rates.

Perhaps now is the time to review your models and make that switch to being a Niche Recruiter. This blog might help Niche Vs. Generalist

Ultra Niche Hot Spot predictions

Scaffolders, Ground-Workers, 360 Drivers, Site Managers, Quantity Surveyors also traditional trades.

 

No 2 Engineering

The top two performing sectors are so consistently above the rest that it is hard to choose which represents the greatest growth opportunity. On balance we believe Engineering is in second place slightly behind IT and Technology.

The skills gaps in the engineering sector are massive and well documented. An ageing workforce of baby-boomers leaving between now and 2025 is creating a huge pressure on skills, which with the lack of STEM graduates over the past 10-15 years means the talent pool to replace them is woefully small and undersized.

To help you understand the scale of the problem research suggests that 182,000 additional workers are needed to plug engineering-focused graduate and apprentice positions every year until 2022. This is according to Engineering UK.

That’s over 1m more engineers.

According to Engineering UKCurrently the UK produces only 46,000 engineering graduates each year. There will also be demand for around 69,000 people qualified at advanced apprenticeship or equivalent level each year. Yet only around 27,000 UK apprentices a year currently qualify at the appropriate level.

Yes the numbers studying are growing and salaries are rising but the solution is that in the short term to plug this gap we will continue to import engineers from the rest of the world.

So are we surprised that one of the UK’s most famous engineers, Sir James Dyson, is looking to secure his own future talent pipeline by investing £15m over the next five years to secure his need to double his workforce to 6,000 by 2020 in his new Dyson Institute of Technology.

Ultra Niche Hot Spot predictions

Controls Engineers, ICS/DCS Engineers, HRSG Engineers, Turbine Engineers, Power Commissioning Engineer, HVAC Systems Engineers, Plant Layout Engineers, Civil Project Engineers (Nuclear, Rail), Automotive design Engineers, Signalling Engineers, PLC and Automation Engineers, PowerTrain Engineers.

 

No 1. IT and Technology

This sector has consistently been our number one for three out of the last four years. Our reason for this is simple.

IT and Technology faces all the demographic issues and supply and demand factors that the other sectors are grappling with.

Yes IT and Technology has an ageing workforce, Yes, the insatiable thirst for experts is never ceasing but the greatest impact is the rate of technological change and advance plus the globalisation of demand.

This is not a UK problem or a Western World or US problem it is a global wide problem.

In most markets many executives and business owners have not comprehended the scale or rate of advancement of technology change and how it could make their multi-million pound businesses obsolete overnight!

You have only to look at how disruptive business models that use technology or businesses that fail to keep up can fall from a market leading position to relative obscurity in 3-5 years to understand what is at stake.

Look at Novell Networks, in 1996 they were the provider of the worlds largest networking software by 2000 Windows NT had taken over their market position and Nokia have failed to recapture that since.

Between 1995-2000 Nokia were the worlds largest supplier of mobile phones today where are they ranked? According to WhatTechSays they don’t even make the top 10.

What about Blackberry? 2000-2005 everyone wanted one where are they today?

What about Amazon? Uber? Google? AirBnB? Spotify? Netflix? All of which are the disruptive models of today and considered by many to be “Rising Stars” or even “Cash Cows” if you apply the Boston Matrix.

But where will they be tomorrow?

Who is next to fall from grace?

So we can see how important technology is.

Take Artificial Intelligence, Big Data and robotics. The total effect of these three advances alone is predicted to transform the world of work in the next 5-10 years. Many jobs that rely on the processing of data and simple decision-making are set to become redundant. At the same time the growth in demand for the technologists that will enable this change is set to explode over the next 2-3 years.

In the US the prediction is 6% of all jobs will go. “By 2021 a disruptive tidal wave will begin. Solutions powered by AI/cognitive technology will displace jobs, with the biggest impact felt in transportation, logistics and consumer services,” said Forrester’s Brian Hopkins in a recent US Government report on the issue.

Business Intelligence is already a high growth niche and Data Science is rapidly catching up. The growth in demand for cloud architects and engineers, who will design the infrastructure as a service (IAS) and platform as a service (PAS), are tipped to accelerate rapidly, as is the demand for the developers who will develop the applications. Algorithm experts that support rule based AI is a key skill that is being included in many job specs and you can expect this to grow exponentially over the next 3-5 years.

If you are in IT and Technology recruitment there is a massive opportunity for rapid growth over the next 3-10 years. A terrific MUST READ article is Gartner’s Top 10 Strategic Technology Trends for 2017. It not only discusses 2017 trends but the likely longer-term developments.

If you are considering IT and Technology as sector to move into or making further planned growth then this is invaluable source of data and foresight.

As our world is set to be transformed, the jury is still out as to whether there will be a net increase in jobs or a reduction. The scaremongers seem keen to spread fear but are they right? Perhaps if it helps people wake up to the change in reality but history tells us otherwise.

We have been here before in the 19th century before the industrial revolution.

In the Pre-Victorian era, millions of people worked in agriculture. Automation arrived and allowed people to move off the land and into cities heralding in a whole new generation of jobs being created in offices,factories, businesses and retail as the factories made a new range of goods, jobs were created constructing buildings and infrastructure as well as roles in merchandising and the selling the goods that were manufactured.

In the 1960s and 70s we were told that the ‘microprocessor’ and computers was going to make thousands of jobs redundant. In 1982 as a young undergraduate working for ICI Plc. in Runcorn I built a prototype freight forwarding pricing system. The concept was proven and implemented by ICI in 1984 and 100-150 booking clerk jobs were made redundant. In the 1980s this happened in thousands of companies across Britain. Yes those roles were lost forever but thousands of others were created employment in the UK today is nearly 8m higher than in 1985 and the percentage of people of working age in employment at its highest at 75% of the working population.

We are about to enter another period of dynamic change and there are going to be huge winners and losers.

For recruiters there is one key question you should all be looking to answer.

Is this change going to see the jobs in my niche or sector become obsolete by this “disruptive tidal wave of technology” or am I serving an area of growth.

If you are servicing logistics, manufacturing, call centre staff, clerical assistants and distribution workers (drivers) then the answer is likely to be YES.

If your niche is in Product design, Engineering or IT and Technology then you are likely to answer NO but then again within all these sectors there will be some jobs that will disappear and other jobs that are created.

It is hard to identify all the winners and losers in this sector but you might find this article from Robert Half on the Top Ten Technology Jobs for 2017 helpful. Equally this article from earlier this year in the CIO Magazine on 10 Hot IT Job Skills for 2016 may give you a few more pointers.

One thing is sure 2017 is the year to review your market and make changes if necessary.

Ultra Niche Hot Spot predictions

UI/UX Developers & Designers, Business Intelligence Experts, Security/CyberSecurity Experts, Cloud Architects and Integration Experts, Data Scientists, Mobile App Developers, Full Stack Web and Product developers.

 

So these are our predictions for 2017. They are are based upon our hands on experience of working with 30-35 recruitment agencies across all sectors in the past 12 months. With all of them growing at annual rates of over 30%+ per year-on-year and some 200-300%, we believe we are well placed to know he best sectors to work in.

In the short term we still see healthy times ahead for the UK Recruitment Market but as we implied beyond 2022 with Brexit and the advance of technology the future becoming less clear.

You may have a difference of opinion and have experiences, which are not so positive so please contact me, [email protected] and let us know or share your thoughts.

We’d love to hear them.

BREXIT – 8 TIPS FOR MANAGING THE CHALLENGES AHEAD

BREXIT – 8 Tips for Managing the Challenges Ahead

Whether you voted “in” or “out” few can disagree that the events of the past few days have been seismic and will change the nature of our country and world forever whatever scenario plays out in the weeks, months and years ahead.

This blog makes no assessment of the merits of either in or out but seeks to help Recruitment Business Leaders cope with some of the challenges you are likely to face.
There is a huge amount of uncertainty; fear and anger about and probably will be for several weeks to come. As we return to work, as recruitment business owners and leaders we have to move forward irrespective of our views. Some of my clients have contacted me recently for some suggestions on how to approach the next few weeks or so please find below my suggestions:

1. The Emotional Cycle of Change recognise and understand it.
Psychologists and business change managers will tell you that in times like this the vast majority of us will go through the following emotional cycle of change. There are various models of emotional change but the most famous model of this was developed by Elizabeth Kubler-Ross.

Her “Emotional Change Cycle” (shock, elation, anger, denial, blame, confusion, and finally acceptance) charts the typical human reaction to change and has been validated repeatedly. Many of you will see this playing out in the media, in political spheres and across social media. This is the first time we have however seen 16m going through this simultaneously.

Some of you will have been or may still be going on this huge emotional journey yourselves with a mixture of shock, elation, anger, denial blame, confusion before hopefully a level of acceptance that you and I individually cannot change what has happened at a national level.

This emotional journey is totally natural and to a degree healthy.
We all make and experience this journey differently and at different paces.
Recruitment Consultants are by their nature tend to be demonstrative creatures and this change will affect them. The vast majority of your teams are young and in all likelihood according to statistical polls did not vote for this so may be feeling angry.
An awareness of this cycle will help you make sense of some peoples behaviour and enable you to support them through this change in so far as it affects them at work.
My first suggestion is that in the first couple of weeks you may need to be more tolerant than normal of emotional reactions but equally you must assert boundaries if these reactions become unacceptable.

Rather than responding yourself to their passion or outburst I suggest you ask people to go for a cool down, a walk, take the afternoon off or even a day or so. The key thing is to take emotion out of the situation. You may feel the need to do this too and that is cool.

2. Strong Positive Leadership

Whatever your personal emotional state, at work I would recommend assuming a strong positive and determined to succeed attitude. There is going to be a lot of doubt, fear and anxiety around. I suggest you need to keep positive and don’t be taken on other peoples fear journey’s. Help your teams remain focused on the positive. In my experience we may be in for several weeks where the glass is half empty and the future unclear and uncertain.

Look for positive stories in your teams work and efforts and in the world around you. Celebrate them and keep people focused on the positive.

It might help to talk about the importance of positivity in the office with your teams and gain their commitment as a team to engendering a positive work environment.

At the same time be aware and look out for ‘mood-hovers’ in your office. Take them to one side and remind them that as a team you agreed that negativity will not be tolerated.

You may wish to use the cooling off techniques already discussed if they need time to adjust to a work issue which has affected their moral.

3. Remind people the fundamentals are still strong

The underlying economy is still strong, the demand for staff exceeds supply, there are still skill-shortages in most sectors and these are not going to change overnight. There are jobs to fill out there. Even at the height of the last recession 96% of business carried on and the Bank of England and most economists would say we are a long way from those times.
What you may notice over the next few weeks is the number of requirements could reduce and change from permanent requirements to temp/contract needs. Some requirements may become harder to find but all this means is we all need to work harder and smarter.

It is worth remembering the story of the two men walking through a forest. Suddenly, they see a tiger in the distance, running towards them. They turn and start running away. But then one of them stops, takes some running shoes from his bag, and starts putting the on.

“What are you doing?” says the other man.
“Do you think you will run faster than the tiger with those?”
“I don’t have to run faster than the tiger,” he says. “I just have to run faster than you.”

We don’t have to out run our tigers in business either we just need to focus on out running our competition. You might find it helpful to motivate your people to pull together. Evoke their sense of team spirit or may be even create a team incentive beating the competition in head-to-head job fills.

4. Track job flow

From your perspective you need to monitor your business closely.

In my experience-tracking job flow is one of the most important things to do to give you a sense of what is really happening in the market. It will vary from week to week as it has done previously so you will need to watch the trend over a two to three-month period. If there is a severe downturn you will note it sooner this way to allow you to take appropriate action. I do not expect this to be too dramatic myself but I think we will notice fewer Permanent roles and more Temp/Perm jobs. The nature of the jobs may change and their durations so watch this too.

Remind people of the A/B/C Job classification and ensure they focus on getting A & B jobs.

5. There will also be BREXIT work to do.

You will find that there are going to be BREXIT jobs probably temps and contract in IT, Finance, Banking, Engineering, Legal, Procurement, Accounting and Call Centre. Be aware they will come as businesses look to change systems, processes and business centres and well as operating locations. It’s an opportunity so be aware of it and have your teams look for it.

6. Work Harder and Smarter – Focus your teams on Activity
In my experience of all the economic down turns (80s, 90s,dot.com and 00s) a key element for success is as well as remaining positive to just work harder and smarter.

Many of you will know this is one of my pet topics but now it is more important than ever.

In my experience in successful businesses all consultants who are not on target need to be hitting their weekly activity targets. Rather than impose this on the teams discuss it and get agreement.

People may need to work longer hours in the short term to maintain their performance levels. That has to be their choice but they may be willing to do that to keep their income levels and in some cases their jobs.

7. Don’t Carry Passengers
The final comment for your team is don’t carry people who have the ability to do the job but are not delivering and pulling with the team. If it helps with some people you may need to remind them of this first and give them an opportunity to improve performance but try the positive approach and the focus on activity first.

If this fails then you will need to look at your disciplinary procedures in your staff handbooks and potentially start formal processes.

I am always of the opinion that giving people notice of what you expect of them and making it clear on what is good performance and what level of performance will not be tolerated will make life fairer for all.

You must be clear and consistent with all your teams and doing this will enable people to make the right choices about making this work.

Ultimately if they choose not to make the right choices around performance then you may have to begin steps to terminate their employment

8. Live in the NOW

Finally on a personal note I read a book several years ago called the Power of Now by Eckhart Tolle. I found it very useful and it helped me go through a personally difficult time in my life and you might find it helpful too.

In essence it suggests we spend too much of modern life living mentally in the past or in the future and worrying about things.
Our minds are either regretting what we should have done or worrying about what might happen. Tolle reminds us the only place where we can actually affect the future is through the actions in the present today therefore we need to remain totally present and focused. In addition I would add that remaining present ensures we do not miss opportunities that exist now, today. They are all around us and we need to keep a watchful eye otherwise we will miss them.

When I started practicing living in the NOW it was difficult and I was shocked how often Tolle was right. I was living in the future or the past mentally but as I started to live in the NOW I also noted that the problems I had been worrying about started to shift and sort themselves out before they actually happened.

My last suggestion to you is therefore learn to live day to day and focus on the reality of what is happening today.

Certainly for the next few weeks try to live each day in the present and ignore speculation about what will could or might happen. Detach yourself from it.

I will not be watching the morning news other than to grab the headlines. To help myself I will be resuming my daily meditations you might want to look at this or practice mindfulness. Yoga is a great outlet and for some of you make sure you increase or maintain your physical exercise regimes.

One of the benefits of practicing living in the NOW is that you will notice the level of fear in your life diminishes.

One of the acronyms for FEAR is that it stands for

Fantasized Emotions Appearing Real

That is FEAR is not reality. In my experience having experienced events, which are truly frightening you do not feel fear when it is happening only afterwards when you reflect on what has just happened.

Fear occurs therefore through the expectation of an event, which people are imagining. There are various NLP techniques we use to help people become aware of the power of the mind and FEAR, which we can teach.

We at the Recruitment Training Group hope this has been both timely and helpful and would love to hear from you if you believe we can help you.

We shared this with our clients first and we share it with you in the interests of helping all of us build and create a new and better world post BREXIT.

Top Recruitment Sectors for growth in 2015

So here we are nearly two years after I wrote Top 5 Recruitment Sectors to be in for next 5-10 years and unemployment was still rising across most of Europe and the UK economy flat-lining how things have changed for us.

Today the Eurozone is stagnating but the UK has enjoyed a solid eighteen months of growth.

Top 5 Sectors for the Next 5-10 Years Update

My views on the Top 5 Recruitment Sectors for the next 5-10 years remain unchanged and there is increasing evidence to reaffirm that these sectors remain the ones that will see the fastest grow:

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

Information Technology continues unabated and this year our blog: The Top 5 IT skills right now! highlighted the key growth areas. Engineering is now also recognised as a key grow area for the UK economy.

Energy demand has abated somewhat since 2013 mainly, due to a slow down in global growth, but this sector remains a volatile sector highly dependent on the oil price. Currently there is a lull but is anyone willing to bet on it staying this low across the medium to long term. So watch this space. What we are witnessing in this sector is a switch to renewables and this is a key growth sector for agencies here.

Finally emerging technology application is starting to impact all sectors and with the talk of 5G Mobile networks allowing people to download 10 HD movies in 10 seconds being launched in the next five years the grow in Hi-Tec applications is set to explode. Only this week the UK Government have given the go ahead for driver-less –cars in five cities across Britain. So watch this space.

Top 5 Sectors for 2015

So what about 2015, will they be all the same?

No 5 – Information Technology

Certainly I see no reduction in demand for Information Technology. In the past month as part of a Managing Client Meetings coaching day we visited an IT Software Development company in South Wales. The business is part of global network of development centres from the US, Switzerland, India and the UK. It was interesting and heartening to hear that the UK remains extremely competitive and what may surprise many is that the differential in development costs between the UK and India is non-existent. In fact when all things are considered the UK is the most cost-effective place for software development certainly for this client. This is not untypical and with IT still attracting large numbers of graduates, the future for the industry looks healthy but not without issues.

The continued drive towards mobilisation of business via smartphones and tablets, the push for businesses to harness the benefits of ‘big-data’ the continue trend to placing everything in the cloud and the drive for virtualization are making skills in all these skill-sets hard, if not impossible, to source in most regions.

Demand for 2015 looks strong.

No 4 – Marketing and Sales

With businesses looking to expand market share, drive into new sectors or leverage the explosion of niche digital markets, 2015 looks to be the year high calibre sales and marketing professionals totally disappear. In the IT services, digital marketing and recruitment spaces my clients inform me that this is already the situation. Rec-2-Rec companies have struggled for a while to find real hard hitters who can deliver good consistent billings. Only Recruitment businesses, which operate with autocratic management regimes seem unable to hold on to their top billers. The abundance of recruitment sectors, which are now experiencing good growth means even average billers are now earning healthy incomes and not to wish to move.

So MD’s if you are losing staff take a look at yourselves first! Your issues may be closer to home than you think.

In sectors as diverse as construction, digital marketing, IT services and capital equipment top billers are not looking to move and businesses are increasingly turning to the ‘grow-your-own’ strategy. At Recruitment Training Group and Selling Success we are experiencing a 300% increase in the clients engaging us to design, build and deliver Graduate/New Sales Training Academies. Even if you don’t use ourselves this is a must for businesses seeking to deliver sustained sales growth over the next 2-3 years. Call us if you want to chat (07552 555858).

No 3 Construction

The phenomenal growth this sector has seen over the last eighteen months means its hardly surprising that we are seeing a slight decline in its progression. Like Information Technology I see this as a healthy sector to be in during 2015 as the demand for new houses continues unabated.

This year has seen huge shortages develop as reported by David Noble of Chartered Institute of Purchasing and Supply, “An encouraging 15 months of sustained employment growth – the longest since 2006-2008 – is revealing a major skills shortage in the sector.”

Irrespective of who wins next years general election there is a massive shortfall in the level of houses we are building currently compared to the demand. The shortfall is currently projected to be 40-50,000 completed dwellings in 2015 with an overall construction sector projected growth rate of 5.3%. With several key capital projects announced recently by the government and the investment being made in roads the sector looks set for a period of sustained growth.

No 2 Financial Services

Whatever your views on bankers and financiers and lets face it we all have pretty strong ones; a vibrant financial services sector is key to sustained growth for the UK economy.

Last month a study released by the CBI and PwC indicated that the finance sector had returned to pre-recession levels. As reported in the Financial Times in October 2014, Kevin Burrowes, UK financial services leader at PwC, highlighted an rising focus on new products and services and ‘technology-enabled growth’.

2015 has seen the return to healthier profit of many of our financial institutions. Our banks have performed well in recent years and they were noticeably absent from the European Banking Authority s list of failing banks recently.

Recruitment companies in the financial services sector are all talking big numbers for 2015 and I believe there is renewed optimism in this sector.

Sectors Worth Mentioning

Of all the sectors not mentioned here the one that could make a real surge in 2015 and upset this prediction is Healthcare. The shortages in this sector are well headlined. Doctors, Nurses and ancillary staff are all in short supply. Overall spending in this sector is either the same or growing not just within the NHS but private sector too. The demand for health workers with frontline skills remains high and once again we have insufficient numbers of people training to be doctors, nurses and clinicians entering the workplace.

In fact all the talk is for more support needed for the Care Sector alone. There is one factor which could change all this and that is government spending. The current provision of care by the NHS and local authorities is failing and the costs are spiralling. This is an issue that the next government will need to address over the next 2-3 years for the sector to remain viable. My contacts within the Dept. of Health and NHS England all tell me a big change is coming irrespective of which party comes into government after next May. My reason for omitting it from the 2015 Top 5 is that I see the changes will come too late to have an impact in recruitment sector for 2015 but expect to be discussing this again next year when we look forward to 2016.

No 1 Engineering

The sector I see most likely to grow the fastest in 2015 is engineering. The estimated annual shortfall of engineering skills in the UK is currently running at over 81,000 people. In addition according to recent studies those of us over the age of 50, who will be looking to retire in the next 10-20 years represent 20% of the UK workforce so this problem is only going to get worse.

A recent study by the Institution of Engineering and technology discovered organisations employing engineering skills reported:

  • Six out of 10 engineering employers fear that a growing shortage of engineers will threaten their business in the UK, research has found.
  • 76 per cent of employers reported problems with recruiting senior engineers with five to 10 years’ experience
  • 43 per cent of employers were not taking any specific action to improve workplace diversity
  • It’s estimated that the UK requires 87,000 engineers every year for the next 10 years to meet projected demand.

Only last month the entrepreneur and industrialist Sir James Dyson also highlighted the skills gap in this sector and all the data around future demand.

The CBI has also reported that STEM – science, technology, engineering and mathematics – skills shortages are widespread, with 43 per cent of employers currently having difficulty recruiting staff. That rises to 52 per cent of employers expecting difficulty in the next three years.

The Royal Academy of Engineering has also published a study saying Britain’s industry will need 100,000 new graduates in STEM subjects and a further 60,000 technicians and apprentices every year until 2020, merely to maintain current employment numbers. At present Britain produces only 12,000 engineering graduates a year. The UK also has the lowest number of female engineers in the whole of Europe at 6% of the workforce.

The evidence is overwhelming and when you get into the detail the demand is increasing too. By way of an example the Institution for Engineering and Technology indicated that 41% of the firms they surveyed planned to recruit in 2015 up 5% on the previous year.

With recent figures showing that the UK manufacturing sector is growing at its fastest rate for many years the demand shows now signs of abating just yet.

Governments Failing

Whilst I am pleased to see the opportunities for our clients to grow their businesses and delighted by the many thousands of views my annual blog receives on this topic every year, I can’t help fearing that our government is failing both our young people and us.

I am not in favour of a ‘centrally-controlled’ UK economy where the places are controlled but surely the existing system is neither working for students, parents or employers. There appears no correlation between the number of university places to study a subject and the projected number of individuals we as an economy require.

Surely we need to run more ‘STEM’ type degrees and fewer ‘Media Studies’, ‘Film Studies’, ‘Sports Science’ degree places. I am not saying that these degrees are worthless because they are not. It is just that UK Plc requires fewer of them than we are producing graduates in.

I have two children studying degrees and this has been a key discussion for us as a family. What I have told them is it is ultimately their decision, but it is a £50,000 decision so think carefully.

So parents if you are interested to know here is 2014’s Top 20 Degrees most likely to leave you on jobseekers!.

If this topic resonates with you then please leave a comment and share it with your connections and friends via Linkedin, Twitter or Facebook.

We would like to take this opportunity of wishing you a happy, successful and prosperous 2015.

Top 4 Recruitment Sectors to AVOID for the next 5-10 years

 

 

Since March 2013 when I wrote my immensely popular blog

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

I have been consistently asked what are the recruitment sectors agencies should be avoiding. The first thing to say is that in my opinion, and those of most employment sector commentators, over the next 5-10 years we are entering a period of massive skill-shortages. Only last month the CIPD’s chief economist Mark Beatson indicated that the War-on-Talent was set to intensify.

 

In addition in recent months several reports by the IMF, the EU and Accenture support this view, which I have commented on in numerous blogs on the topic:

The demographics in many developed and developing, countries mean they will be facing declining skilled workforces and populations over the next 10-20 years. As a consequence severe skill shortages are inevitable in these economies. Recently the Telegraph highlighted this issue further in an article:

Britain’s baby boom will affect our economy more than anything Mark Carney does by Allister Heath, telegraph.co.uk June 7th 2013.

In the case of China the issue is so large that the IMF claim it will have a 140m-worker shortfall of skilled workers by 2030 which could have strategic implications for the security of the Pacific rim.

Therefore against this backdrop where demand for skilled labour will exceed supply there will always be an opportunity for enterprising recruitment agencies to plough their furrow. That said there are going to be some sectors where the opportunity for reward will be greater than others.

 

 

So having outlined my caveat here are my five sectors you should be avoiding if you wish to your agency to make the Sunday Times Fast-track 100.

 

1.         Admin and Clerical

11797609_sSince 2007 the US economy has lost 2m clerical workers and the UK 160,000 or 4.8% of the workforce. In the US clerical work accounts for 16% and in the UK 12% of all employment. (Sources: US department of labour projectionsUK Commission for Employment and Skills (UKCES) Working Futures Report 2010-20 (revised August 2012))

In the UK this figure is projected to decline to 10% of the UK workforce by 2020 with the loss of 400,000 jobs.

The reasons are that as businesses grow they increasingly seek to automate processes particularly those involving data collection and data processing and also use call centre to handle customer eqnuires. So the consensus is that this number, as a percentage of overall workforces will decline in most developed or developing regions of the world.

In our blog Can you win the Talent War we considered the McKinsey Report  which discussed the New Employment Structures. We pointed out that McKinsey;

Highlight the trend over the past 30 years of where transaction-based jobs that could be standardized or scripted have been automated or shifted to low paid workers. Now they highlight the knowledge worker jobs such as managers, sales reps, engineers, lawyers, managers, teachers and doctors which they label interaction jobs as being the major growth area and vital for companies and countries a like.

Clearly some recruitment of admin and clerical staff is going to continue and there will be thousands of jobs to be filled. The question for me is however with all the tools of job-boards, social media and direct/in-house recruitment teams how much will be conducted via recruitment agencies? My guess is nowhere near as much as there has been in the past.

During my research I have spoken to several admin and clerical agencies and reluctantly agree. They do pioint out however that those ones with strong long-established client relationships will survive and in some areas prosper especially where their focus is the SME market who do not have effective internal recruitment solutions. For those wishing to remain in this sector perhaps this should be your key focus.

Gone however are the days when thousands of admin workers will be supplied via agencies to FTSE 250 companies. Clearly if you are operating in this sector you might need to undertake a SWOT analysis to review your future position.

You however may violently disagree. If so please let me know. I believe debate on this issue is healthy.

 

2.         Unskilled Industrial/Manufacturing

18124171_sAgain the data that exists on this comes from the US & UK employment figures. The US department of labour projections point to unskilled manufacturing jobs declining between 5-10% during the period 2010-20. In Britain the (UKCES) Working Futures Report 2010-20 (revised August 2012) provides good employment sector data and projections. For those in recruitment it represents a must read even if you don’t necessarily agree with its findings. This report itself points to a decline from 8% to 7% in the number of people employed in manufacturing.

These declines will be heaviest in old traditional industries where offshoring, productivity gains and industry decline will account for most of the reductions. In hi-tech sectors such as IT, Aerospace, Oil & Gas and electronics, much in line with our previous blog on the topic, the declines will be smaller. The overall decline in this sector is projected to be a fall of 400,000 jobs with particularly sharp declines expected for unskilled and semi skilled manual workers.

The reasons are obvious the cost of labour in the UK compared with China, Asia and the emerging African economies means that production of low value items will move abroad. Hence why UK Plc. needs to focus on hi-tech products or those where we can add-value.

In addition where these people are recruited I see an increasing role for In-house/Direct Sourcing teams who can leverage their clients brands to attract the numbers and volumes they seek.

The opportunities in this sector for recruitment agencies operating a traditional model are therefore limited. Again the SME market who do not have access to strong brands and in-house recruitment teams may offer some agencies hope.

 

 

3. Customer Contact and Call Centres

10112935_sWe have seen this area decline for many years now and the decline is set to continue further caused by three factors:

  • Off-shore of customer contact centres
  • In-house/Direct Sourcing Teams
  • Switch to Online and Mobile App purchasing

The combination of these three will see volumes of recruits via recruitment agencies continue to decline. There has been a reversal by some employers of the strategy of offshoring their customer contact centres due to customers complaints and service issues but this trend is being more than offset by the greater use of technology which are creating contactless purchasing systems.

In addition as with the other two areas Direct/In-house Sourcing teams are having great success in attracting staff and filling the needs of their business. They are in many cases more than managing to cope with the level of applicant attraction required to maintain and increase employee numbers.

 

4. Public & Third Sector

public-sector-pagesThe final sector I have highlighted to avoid will not surprise anyone in the UK. There has been much written in recent years about the decline of the UK public services from their peak in 2008, virtually all of it by interested parties on various sides of the political spectrum.

Once again the UKCES Report points to a total 2% reduction in the number of people employed across this sector falling from 27% to 25% by 2020. This reduction is actually masked in my opinion by the switch of roles from the public to the third sector as local authorities and NHS trusts reallocate the provision of some of their services into social enterprises.

For example the Office of Budget responsibility forecast in February this year that central and local government employment would fall by 900,000 between 201011 and 2017/18 as a result of government cuts.

This figure has been challenged by many commentators, who claim the reductions could be even greater, as much as 1.2 million. Clearly some of these jobs will switch to the third sector but it is unlikely that we will see more than 400,000 new third sector roles created and some claim it will be as little as 150,000.

Whatever your political views on this it is unlikely to be an area of growth for recruitment agencies in the way that it has been in recent years.

 

Common factors

imagesYou will by now have noticed that there are some common themes emerging. With the exception of the public services one or more of the following appear to contributing factors in all of the remaining cases.

  • Offshoring of roles and business functions
  • Supply of unskilled or semi-skilled workers
  • Technological advancements
  • Direct/In-house Resourcing of staff

Only one of these is new, namely the rise of Direct/In-house Recruiters. As a young adult of the 1980s I can bare witness that we have seen all this before. The only change here is the jobs being off-shored today are the ones we were saw replacing the old declining industries of the 1980s era such as coal mining, clothing manufacture and steel working. You only have to visit parts of Lancashire and South Yorkshire to see the plethora of call centres and customer service centres that populate the old mining and cotton mill towns. Some even operating on former sites.

Technology and alternative sources of cheap labour have always meant that job functions will shift round the globe where a predominance of unskilled or semi-skilled labour is required for the production, manufacture or delivery of a service or product.

No country is immune to this.  Germany saw the switch of its manufacturing eastwards after the collapse of the Berlin wall firstly into the former East German regions and then into Poland, Hungary and the Czech Republic. India which was the recipient of so many of the UK jobs  in the 1990s is now seeing many of these transferred further eastwards or even into Africa.

The only way a country can retain its employment is to become experts at leading edge technology industries. Where design and development is a key factor but this too may shift elsewhere with university education globally changing.

As recruitment consultancies we are, to all-intense and purposes, ‘traders of skills’. We must not lose sight of this. We only exist because of the inefficiencies of the supply side of the economy. That is where:

  • Nations fail to direct their investment in skills and training in workers to satisfy their future businesses needs.
  • Where employers fail to invest sufficient in their workers over a period of time to satisfy their future organisations needs and hence have to pay fees to appropriate staff from other employers.
  • Where employers do not have the skills, resources or mechanisms to identify, attract and retain their workforce needs

Is there a better solution?

sc ience UniAs a parent of four children with ages from 12 to 22 you can imagine we have plenty of barbecue discussions with friends around the whole issue of youth employment. As a former advisor to Liverpool John Moore’s University on employability I have debated this subject many times.

I do question whether the time has come for Government, the Further Education Sector and UK Employers, perhaps the CBI, to attempt to address this fundamental issue for the long-term sustainability of the UK economy. Shouldn’t there be a degree of connection between the number of degree spaces for subjects and the projected UK demand for a skill area. Why if industry, commerce and education are crying out for maths, science and engineering graduates are we using scare resources to educate large numbers of people in subjects for which the volumes of meaningful employment does not exist.

In addition it seems ludicrous for tens of thousands of students to be accumulating up to £50,000 worth of debt each to acquire a degree in a subject for which there is no likelihood of them all getting a job. Aren’t we are deluding these young people that they will ‘get a job’? It could be argued we are ‘mis-selling university degrees, now there’s a thought!

The rapidity with which the economy and employment shifts means that the laws of supply and demand which should ultimately rebalance this inequality may not ever have time to take effect.

In the meantime we could be destroying a whole generation of young people and ultimately ourselves as a society by failing to remedy this issue.

 

Conclusion

In the meantime it is clear that whilst supply side inefficiencies exist there will always be opportunities for entrepreneurial recruitment agencies that are experts in their niches but it does beg the question; Are the days of the generalist high-street recruitment agencies numbered?

That however is another blog.

As always these are my thoughts and I’d be delighted to hear your views too.