Future of Recruitment 2020-2030 – Your Future Starts Today

Future of Recruitment 2020-2030 – Your Future Starts Today

Over the past six to seven years I have written many blogs, many of which have proved hugely popular like Top 5 Recruitment Sectors to be in for the next 5-10 years which has had over 30,000 readers and this years Top Recruitment Sectors for Growth in 2018 .
This blog however is probably my most important as for those of you working in the Recruitment Sector either acting as agencies, internal recruiters or HR professionals the next 15-20 year promise to be the most dynamic, volatile and revolutionary in the history of our sector.

The level of change that our industry and the “world of work” will go through is to some people incomprehensible.

As business growth coaches we are challenged when supporting our clients with their three to five year growth plans in having to predict the impact of many of these changes upon their market sectors a task we have been doing now for nearly 10 years.

If you are looking to develop your career in recruitment or sell your business in three to five years, what the world will look like and how resilient your market sector will be in five to ten years is a major consideration.

This question therefore is one we consider and reflect on weekly with our clients as more information and reports are circulated.

Our blog therefore represents our snapshot in time (Spring 2018) and could be different in six months time as revelations about the Future of the World of Work unfolds.

Recruitment Industry Agency Models

To us there are essentially three agency models, which can be blended or broken down and modified to reflect certain sectors.

• Niche recruiters
• Generalist Recruiters
• Managed Services (MSP/RPO/NV/Mast Vend)

Increasingly the market is polarising around the Niche and Managed Service models with the generalists struggling to maintain margins, market differentiation and profitability.

Niche Recruiters

The Niche model, in its various guises, leverages the numerous skills-gaps that exist in the UK and Global economies and has two drivers,

• Find the rare skilled candidates and gain a degree of exclusivity
• Sell the rare skilled candidates to the highest bidder

Niche recruiters have been the success story of the past 15-20 years and are dominated by SMEs. They leverage their status as niche sector experts and master their ability to find and secure any skill in that sector. It is fair to say most of our high growth agencies are all niche agencies.

Increasingly these niches are becoming narrower and deeper. The expression “inch wide, mile deep” has been used many times to describe them.

These agencies have become very effective at maximising their fees and making healthy returns.

Managed Service Recruiters

These operate at the opposite end of the market and work on volume and at a lower transaction price. They industrialise process and are constantly seeking productivity gains to driver down delivery costs, as well as increase their quality service thus generating extra profit.

The cost of acquisition of staff for their clients is constantly failing as they invest greater and greater sums in automation. AI and chat-bots greatly excite this sector as it gives them even further opportunities to increase productivity gains. It also raises the bar for the smaller operators as entry to this market becomes more complex and costly. That said this too might shift with automation. We will have to see.

These suppliers have become very effective at exploiting their clients employer brands as they become very effective “one-stop-shops”.

At the same time the agencies in this sector are seeing their market under attack from Clients In-sourcing strategies where In-House Teams take these contracts back inside and TUPE over the operational staff that are delivering these solutions.

Generalist Recruiters

Increasingly the directors of these businesses are moving their companies more towards operating as a collection of niche businesses under one-roof as they see their margins squeezed by the ever-aggressive Managed Services Businesses and as they struggle to provide expertise that the niche agency suppliers bring to bear.

In certain localities across the UK we see a future for these generalists if they focus on getting close to the SME business sector in their locality but in most locations I think they will struggle unless they specialise and move towards the niche model.

Key Reports

This is a dynamic landscape with new reports out each week but the key reports we focused in this blog are:

PWC – UK Economic Outlook 2017 -Workforce of the future
Forrester – The Top Emerging Technologies To Watch: 2017 To 2021, various
World Economic Forum – Future of Jobs
Frey & Osborne – Future of Employment & US & UK Labour Stats
Nesta/Pearson – The Future of Skills: Trends impacting on UK employment in 2030
Deloitte – (2016) Automation transforming UK industries
REC – The future of jobs Report
• Elon Musk – Various Interviews

Key Headlines

The world of work and the future of recruitment is going to be a highly dynamic market and there is no overwhelming consensus on the cumulative effects of change as to what the future will look like.

There is general agreement however on some elements like what are the major technological dynamics that will affect the market:

• Automation
• Augmentation
• Artificial Intelligence
• Autonomous Vehicles
• 3D Printing

It should also be noted that there are other effects, which also feed into this market dynamic and these are:

• Longevity and ageing societies
• Changing Nature of Work, flexible working, remote working
• Climate change and natural resources
• Geopolitical volatility
• Consumer ethics and privacy issues

Automation

Automation affects employment in 2 ways:

Displacement Effect

• Negatively – by directly displacing workers from tasks they were previously performing.
• Tend to be low skilled roles

Productivity Effect

• Positively – by increasing the demand for labour in other industries or jobs that arise due to automation
• Tend to be high skilled roles

An analysis by Deloitte of ONS data suggests that the impact of automation is already being felt in sectors where a high proportion of jobs have a high chance of being automated. (Taken from REC – Future of Jobs).

In the UK most of the major jobs losses between 2001-15 have been in Manufacturing 720,000 with the largest number being created in Health and Social Care 1.1m.

Interestingly Professional, Scientific and Technical appeared in the top three for both jobs lost and created. Deloitte’s analysis concluded that all of those lost had a high chance of automation whilst of those created 88% had a low chance of automation.

Augmentation

This is where technology is not replacing workers but supporting or augmenting their skills and performance to improve their effectiveness and efficiency.

A good example of how automation is augmenting healthcare jobs can be seen from the work of Prof. Paul Leeson of Oxford John Radcliffe Hospital and his colleagues who have developed a system that they claim could save £1.1 billions of pounds by enabling the heart diseases to be picked up much earlier.

The technology will start to be available to NHS hospitals for free this summer and Prof Paul Leeson –”Data indicates that the system had greatly outperformed his fellow heart specialists.” Of 60,000 heart scans carried out each year, 12,000 are reportedly misdiagnosed at an estimated cost of £600million.

This story appeared in a Daily Telegraph article in 3rd Jan 2018.

Artificial Intelligence

According to the Encyclopaedia Britannica :

Artificial intelligence (AI), the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings. The term is frequently applied to the project of developing systems endowed with the intellectual processes characteristic of humans, such as the ability to reason, discover meaning, generalise, or learn from past experience. 

This will remove a whole host of repetitive jobs across business and industry as can be seen later with the role of accountants and book keepers.

The World Economic Forum – Future of Jobs report, which looks at the 2015-2020 period and predicts which sectors are likely to see the most jobs losses.

Again this report like the Deloitte report lists Manufacturing and Production jobs high up behind Office and Administrative jobs. This time it lists Education and Training and Sales Related jobs as being the least in danger of automation. Once again Professional Business and Financial Operations jobs along with Management roles featured amongst the lowest at risk of automation.

Finally the work of Frey & Osborne from Oxford Martin University has been heavily quoted by many commentators and an interactive graphic produced by Bloomberg enables readers and recruiters to enter a job type and see the likely risk of automation to the role. We’d encourage you to review key jobs that you recruit for to see their likely risk of automation over the next few years.

The link is www.bloomberg.com/graphics/2017-job-risk/

Bloomberg quote Frey & Osborne:

Researchers at the University of Oxford, for example, estimate ” that nearly half of all U.S. jobs may be at risk in the coming decades, with lower-paid occupations among the most vulnerable.”

Their graphic for example shows that Accountants and Auditor though well educated and well paid were at a 94% risk of their jobs being automated.

Whilst this has been questioned by many you only have to look at the accounting tools now available from Xero or Sage to understand how through AI and machine learning this can easily happen.

As one of Sage’s Top 100 Global Business Influencers I contacted their product development people to see if they had any thing they could offer me to help explain this and I am delighted to say they shared with us details on their chatbot Pegg.

Pegg:

“..is your smart, admin assistant that lives in your mobile, so you can record your expenses anywhere, anytime, without hassle or entering paper receipts.”

“Because of clever integration, simply message Pegg with your expenses and it automatically accounts for it in Sage One.”

With bank feeds now entering all your credit card and bank account transactions directly into Sage One and with rules on how expenses from specific suppliers are handled, the whole process of book-keeping and receipting your transactions can be simplified and semi-automated. It becomes very easy to see how with further AI this whole accounting process could be fully automated in the next 5-10 years.

In the UK Carl Frey, co-director of the Oxford Martin programme on technology and employment at Oxford University, estimates that as many as 35 per cent of jobs in the UK are at risk of loss.

The message is similar.

The top ten of jobs most at risk of computerisation feature

With the top ten jobs at least risk from computerisation being

Source – Taken from REC – Future of Jobs

Again health and social care as well as sales professionals feature very strongly.

Autonomous Vehicles

Much has been said and written about this subject in recent months.

Elon Musk the CEO of Tesla Inc.claims totally autonomous vehicles will be on the roads in 2019 and they will be 10x safer than human drivers.

In November 2017 the UK Government announced Driverless cars will be on Britain’s roads by 2021 as a result of sweeping regulatory reforms that will put the UK in the forefront of a post-Brexit technological revolution as reported by the Guardian

And in the same months Volvo signed an agreement with Uber to supply them with tens of thousands of autonomous driving compatible base vehicles between 2019 and 2021..

Then in December 2017 Tesla launched their new “Semi-Truck” whose power and torque are vastly superior to all diesel engined vehicles.

What this means for employment in the transportation industry who knows as many working in the sector refuse to see any significant changes in the next 10 years. This nevertheless offers a huge opportunity for a disruptive business model so lets wait and see.

However the PWC UK Economic Outlook also estimate that transportation and storage (56%), manufacturing (46%) and wholesale and retail (44%) have the highest risk of automation the overall UK economy has a 30% risk of jobs being automated.

This compares very favourably with Germany 35% and the US 38%.

Human Qualities

Some of this discrepancy between the various reports can be explained by the unique qualities that we as humans have.

The reports are generally in agreement that the following are the human qualities that are the areas that machines will have difficulty automating:

• Emotional Intelligence
• Critical thinking
• Collaboration
• Emotional Support
• Original thought
• Abstract concepts
• Conflicting concepts
• Persuasion

The future is also not all bleak as clearly there are many new jobs being created. The IDC sees 2.1m jobs being created in the US by technology augmenting workers in the world of CRM over the five years to 2021.

AI has the potential to make many jobs more productive and remove a lot of the mundane and boring elements of jobs.

A key conclusion worth noting is how to protect yourself from unemployment which is listed as education.

The World Economic Forum estimates that those with GCSE2 have a 46% risk of losing their jobs whilst those with degrees are only at a 12% risk.

What we are going to see are jobs being defragmented and the tasks that can be automated being undertaken by machines and tasks that requiring humans being consolidated into new roles.

In fact the World Economic Forum’s Future of Jobs 2016 estimates that 65% of primary school children will end up working in jobs that don’t exist yet.

Future Scenarios

Part of the reason for the variation in predictions comes form the fact that there are a number of scenarios being considered.

There is a great Infographic from Salesforce, which illustrates this:

In the first scenario they call “False Alarm” new jobs emerge slows and current jobs are displaced slowly so nothing changes much. Personally I see this as the least likely of the four options.

The second scenario called “Jobs Crisis” has current jobs being displaced quickly creating unemployment and due to inertia, public sector intervention, private automation tax and heavy resistance to new technology new jobs are created slowly.

In the scenario called “New Economy” current jobs are displaced quickly and new jobs are created quickly. We would need to invest in training and retraining. For some this is exciting and dynamic but for many this would be too chaotic and could be very difficult for large parts of our society to cope with emotionally. This scenario if too rapid could see violent responses from some sections as well as huge increase in mental health issues for society.

The final scenarios “Labour Shortage” characterised by investment in training would see new roles created fast but traditional jobs displaced slowly. This would impact UK economic growth and could be catastrophic in the long run on our global competitiveness.

Personally I believe “Labour Shortage” and “New Economy” are the most likely scenarios and believe we will spend time potentially in both of these over the next 10-15 years.

Impact on Recruitment Process

As well as the sectors in which we supply and operate all this new technology will also impact the process of recruitment itself.

Source – Taken from REC – Future of Jobs

• AI – Will Increasingly be used to identify and sift candidates, for screening, compliance and skill verification
• Video Interviewing – Will become common as it removes geographic boundaries and speeds up the process
• Collaborative hiring – Tools to enable individuals to collaborate objectively in the process whilst operating in different geographic locations and time zones will become common, particularly amongst multi-nationals.
• Gamification – Technology to enable candidate testing during process
• New Resourcing Platforms – New ways of working to deliver efficiencies

All of these process changes and more will increasingly be used in the next 10-15 years. In many cases they will require high levels of capital investment taking them out of range of the SME Niche and Generalist Recruiters further adding ammunition to the armoury of the large MSP/RPO Recruiters enabling them to further penetrate the large corporate markets and drive down costs and increase profits.

In addition large corporates may choose to use these tools to insource these large contracts and deliver the efficiencies back into their own businesses.

The Consequences for future of recruitment

Threats to the future of your Recruitment Agency

If we reflect on the evidence that has been presented so far what we can conclude is that as well as destroying traditional job roles and job families the new technology will create new job roles and new job families of jobs.

As we have seen large numbers of roles are likely to disappear in transportation, manufacturing and wholesale/retail sectors. In addition some of the professional sectors will see many menial and semi-skilled roles automated. A lot of these roles will be the creation and preparation of data.

At the same time jobs will be created in health and social care sectors, education as well as highly skilled roles in the high tech, scientific, technical and professional sectors. Many of the professional, technical and scientific roles will be in the interpretation of data where there is often no clear right or wrong answer and it requires a careful balance.

The “Job-Crisis Scenario” discussed above presents a huge threat to recruitment agency businesses large or small with traditional jobs displaced quickly and new jobs created slowly. In this case we would see large-scale unemployment, which would be good for no one or any economy.

Another threat for many agencies would be huge market disruption that prevented consultants tracking where the skills-gaps were or being able to service them. It would also prevent employers businesses being able to plan and predict their future and would make recruitment highly volatile and uncertain which in turn would disrupt growth and economic expansion.

A highly dynamic situation where skills-gaps were created and disappeared too quickly would make the conditions almost impossible for niche consultants to develop their skills and deliver a high quality and reliable service to employers.

Finally another threat to all recruitment agencies would be if the dynamic changes disrupted long-standing customer relationships removing continuity and allowing their competitors to move in.

Opportunities in the future for your Recruitment Agency

In the opposite scenario “Labour Shortage”, where new jobs emerge quickly and current jobs are displaced slowly the opportunities for niche agencies to benefit will be huge. Significant opportunities would also exist for generalist or Managed Service Recruiters as well.

Also The “New Economy” scenarios would also create sizeable opportunities for recruitment agencies to thrive through servicing their clients needs by continuing to leverage their skills and expertise either as a niche recruiter, generalist or Managed Service Recruiter.

In-house recruiters in both scenarios would have a key role to play/

In situations where these skills gaps are created rapidly then highly skilled expert recruiters who know their niches well or have strategies to recruit at volume should prosper.

Such a dynamic market is likely to create situations where agencies with less agility or expertise could see their customer relationships disrupted or lost to agencies that are better able to respond to the rapidly changing market conditions.

It proffers the opportunities for some agencies, (niche, generalist or MSP/RPO) to strike up Strategic Partnerships with some employers who seek continuity of service and supply.

Finally it also creates a huge opportunity for all agencies to offer consultancy to employers on how to create new roles that can easily be resourced and build resilient resourcing strategies that help businesses deliver ambitious growth plans.

It does call for a different type of selling however. Agencies will need to learn “consultancy sales” skills as well as strategic relationship sales skills.

It may require different sales professionals to the ones currently employed by some agencies which some might find extremely challenging.

Conclusion

No one knows what will actually happen and to a degree there is still time for us to avoid many of these pitfalls and maximise the opportunities that this new industrial revolution will create for us as the recruitment community as well as society as a whole.

One thing however is certain and in the words of Bob Dylan,

The times they are a changing.

As recruitment agency owners, directors and talent leaders one thing you would be wise to do is not ignore what is happening and wait for the future to become clearer before acting.

The reason….because it may never be clear.

We are moving into a world of constant and dynamic change.

My advice to all our clients is monitor, observe and where you feel there is a clear shift respond to opportunities or mitigate any risks to your business.

This may mean:

• Diversify your niche sectors.
• Move form being a local generalist to being more niche focused.
• Recruit consultants who are more responsive to their clients and the market.
• Seek out employees that are more flexible and innovative.
• Build resilient client relationships.
• Review your business operating model.
• Reduce your office network.
• Change your CRM/Mid-office technology platform.
• Review your consultant recruitment and training strategy.

It may also mean in the medium term moving away form sectors such as:

• Logistics
• Warehousing
• Manufacturing
• Low/semi skilled temps

It could mean exploring sectors such as:

• Hi-Tech
• Health and Social Care
• Education
• Technical/Professional

The recruitment agencies that thrive and prosper in the next 15-20 years and therefore the entrepreneurs who go on to succeed will be the “fittest”.

To paraphrase Charles Darwin –

Those entrepreneurs whose businesses that “have the closest” market “fit, are therefore the ones that will leave the most copies of themselves in successive generations” and are the ones that will survive.

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.

 

 

 

 

 

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.