A more positive economic outlook is now a key message from financial forecasters. But to what extent have these indicators of improvement been boosted by government stimulus and, assuming that the recovery continues, when will it manifest itself as higher employment? Tim Brown examines how and when green shoots translate into recruitment patterns.
September unemployment statistics released by the ONS revealed the unemployment rate was 7.9% for the three months to July 2009. It has not been higher since the three months to November 1996 with the number of unemployed reaching 2.47 million.
The number of people claiming jobseeker’s allowance rose to 1.61 million in August, the highest since May 1997 and the 18th monthly rise in a row. While the total number of claimants is still on the rise, the number of new claimants per month has decreased from 65,500 in March to 24,400 in August.
Figures from EEF’s Engineering Outlook released in September revealed that the proportion of companies cutting jobs in the third quarter of 2009 still outweighed those recruiting. However, the employment balance showed definite signs of recovery in the three months to September with an improvement of 11%. Capacity concerns in some parts of manufacturing are likely to be keeping further significant workforce adjustments on hold for the time being. Smaller companies have been the least likely to cut staffing levels, reporting an employment balance of -12% compared to the current average of -29%. Looking ahead, the EEF employment outlook is more upbeat with the forward-looking employment balance rising to -15%. This move towards optimism is echoed by Governor of the Bank of England Mervyn King, who has expressed a belief that the financial storm is beginning to clear.
However, caution remains the watchword.
Howard Archer of IHS Global Insight suggests that it is still likely that unemployment could reach the three million mark in 2010, “Unemployment is a lagging indicator and the sharp overall economic contraction suffered between the second quarter of 2008 and the second quarter of 2009 will continue to weigh down on the labour market for an extended period”. His warning is echoed by TUC General Secretary, Brendan Barber who commented: “There are now over a million people out of work for more than six months, one in three of them under 25. There are no signs of recovery here…
This is not the time to take risks with policies that could make unemployment worse. It might look rosier in city dealing rooms but out in the real world unemployment is the number one issue.”
But despite the gloomy employment figures, the downturn has provided some opportunities for revolutionised employment options. This has been coupled with a reversal in the employment market to favour the employer meaning greater choice, better candidates, lower costs and less risk. In fact even the most risk averse business owner can now engage in the recruitment process using stricter contract terms to achieve the right candidate, at the right price.
Assessing the job market of the entire manufacturing industry as a collective is simply impossible. There are no employment trends that are applicable to the every sector indeed some manufacturing sectors have escaped relatively unscathed whereas others have experienced the full brunt of the downturn. A comparison of the food and drink and the aerospace industries highlights some of the commonalities and differences experienced.
Food and drink sector
The food and drink industry provides an example of a sector which has largely continued to prosper in recession. “Food and drink and the pharmaceutical sector have been relatively buoyant over the whole period of the downturn,” says Dean Ball, operating director of Michael Page. This has been largely due to the strength of the ‘necessity’ manufacturing industries but is also partially thanks to the adoption of innovative employment options.
The food and drink industry has consistently utilised varying employment methods which has helped it to remain strong. Angela Coleshill, Food and Drink Federation HR director, says that temporary workers are highly valued and sought after in the sector. “They are vital to keeping the food and drink industry responsive, flexible and ultimately competitive,” says Coleshill. “The seasonal nature of our industry means that having a flexible labour pool is essential. We need to be able to respond to customer demand and calls by retailers to provide products for promotions at short notice.
The food and drink sector has never faltered from the hiring temporary workers in all capacities.
However the recruitment process has certainly grown more difficult with the increase in employee competition. “We are finding that we have a much higher volume of speculative enquiries for work,” says Coleshill. “When we do advertise the sheer volume of applicants has an impact of the efficiency of the process.” This situation has only added to an existing problem with attracting the desired quality of recruits. According to Coleshill “the pre-conceived image of the sector, poor awareness of the career possibilities and competition from the service and retail sector” have all hampered industry development in the past. However, on this head at least the recession has provided an opportunity for relatively stable and savvy companies to attract a previously rare quality of applicant. This phenomenon is not specific to any particular industry and is due to a current surplus of applicants with degrees in speciality areas such as engineering which are renowned for low candidate numbers.
Neil Dunthorne, aerospace director for technical engineering recruitment at recruitment firm Morson International says that the aerospace and defence arena have been publicised as suffering heavily in the recession with redundancy announcements at major aircraft manufacturers.
However, according to Dunthorne, the recruitment of a specific number of people required for individual projects through contract or temporary roles has recently been of great assistance to civil aircraft manufacturers observing that those companies which have adopted this recruitment strategy have not had a major surplus of permanent staff when work has slowed, but instead have been able to put on hold recruiting new contractors.
A consequence of this halt in recruitment has been increased competition in the aerospace sector, due to a consolidation of high calibre labour. This has in turn instigated an impatience with under-performing contractors and a trend, absent from the industry in recent years, of swiftly replacing these with more competent individuals rather than investing in training and development.
However, Dunthorne warns that this “constant churn of staff is not good practice and will lead to problems in the long-term as employees will not be motivated and enthused to fulfil their role to the best of their ability.” He says that “employers should always be looking to offer training and performance development support to ensure a dedicated, committed and hardworking workforce.”
Efficient Executive Recruiting
The recession and continued development of the IT sector have brought about fundamental changes to the means by which talent can be sourced.
Steve Gilroy, who heads the UK arm of Vistage, a chief executive development organisation, says that employers now have a host of new recruitment options available and predicts that some of the more traditional means of job advertising will soon disappear. “The focus on cost-reduction is also forcing organisations to use the new technologies and methods, even if they have resisted such moves in the past. In general, employers are finding that the use of technology, the Internet, social networks and personal recommendations or referrals are actually very effective and much cheaper alternatives to traditional means of recruitment.” But despite this enthusiasm for alternative recruitment methods Gilroy believes that specialist agencies will continue to provide an important service within recruitment. A quality professional recruitment agency offers consultancy advice and will spend the time to understand an organisation.
In addition they can ensure the desired quality of candidate is achieved by benchmarking candidates against a company’s existing high performers.
The best advice for manufacturing companies, according to Andrew Nicholas, regional director of Executives Online Midlands, is that they be clear on what they need and be open-minded in terms of how they access the skill base they require. “It is important not to fall into a pattern of active inertia,” says Nicholas.“ For example doing something just because it worked previously. Be adaptable to the changing times. It is advisable to avoid the previous processes of thinking you must hire a permanent executive from the same industry just because that was previously the norm. One option that makes sense is to hire an interim manager with expertise and knowledge in management that can give the company a better understanding of what they are looking for longer term and deliver results that the business needs in the short term. A good view to have is that an interim manager from outside the industry can introduce new skills and be a positive change agent to reinvigorate a company and allow it to grow and take on, once more, a positive agenda once tough change has been enacted.”