It is fair to say that the job market has been extreme and the economy is now feeling the pinch.
Examining the public sector employment market as it stands
In the last year the UK was experiencing an unrelenting explosion of vacancies, with the public sector being no exception. The number of new vacancies increased by 462,000 between October and December 2021 alone. However, growth has slowed over the last few months. The latest ONS statistics suggest that while the number of vacancies remains 54% higher that pre-2020, there are only 2.7% more vacancies than a year ago. For the past year at Morgan Law, my team has been selective with the clients we work with, consulting and educating on market conditions to enable them to navigate through the dearth of opportunities.
Equally we have not seen an increase in the number of candidates available. I believe there are a range of reasons for this, from employees remaining loyal to their employers following the pandemic to quiet quitting and work/life comfort. More recently with the rising economic uncertainty and cost-of-living crisis, people are unsure about risking the leap into new opportunities and hunkering down.
Candidates who are looking to move have more options than ever both in and outside of the sector. Having spent the past two years revaluating their careers and lifestyle people have become highly selective in what they want from their workplace. In the age of hybrid working and an increasing cost-of-living crisis, how can the public sector continue to attract and retain top talent? And how will candidates and employees respond to changing employer demands as public sector organisations are asked to do more with less?
These questions are troubling many in the public and not-for-profit sectors. As an experienced specialist recruiter, I’ve watched the market closely for over two decades. Whilst candidates have been in the driving seat over recent months allowing them to dictate changes to workplace expectations, I believe that the balance of power is once again shifting back towards employers.
How have employment and workplace expectations changed?
Through the pandemic employees have experienced three years where they have been able to re-focus on themselves, and rightly so. This space for evaluation and self-reflection has allowed people to ask important questions of themselves and their employers. How they define the purpose of work and how what they do impacts them, not just professionally but personally too.
Candidates now have a better sense of what they want from a job. Others have experienced a realignment of priorities and a shift in mindset that values greater work-life balance. People have reassessed how they can work and have new ideas around how they should work.
Employees now have extremely varied expectations from their employment that have taken hold as permanent demands. Expectations that three years ago weren’t even on the radar of most employers. Indeed, the Government have recently announced an intention to cement flexible working for employees as a default from day one of their employment.
From a candidate perspective they’ve held all the power – unemployment is low, as of October 2022 there was an average of one unemployed person for every single advertised job available – with such high demand, candidates have been able to pick and choose. Those with change, project and digital skills have been in such high demand that they’ve been inundated with offers. Consequently,
bidding wars were not uncommon and the impact resulted in some employees potentially being paid more than their capabilities would suggest.
In my experience, recently there has been an upturn in candidates that are moving roles and they fall into three categories:
1. Those looking for career stability in difficult economic times
2. Those that are looking for an increase in pay or greater benefits
3. Those whose improved professional development has been overlooked and want progression
The Great Rebalancing
Where we have been – i.e., a place of low talent supply and high vacancies – has been dominated by candidate expectations. Attracting talent is more difficult than ever, vacancies remain unfilled, organisations are making bad hires and certain disciplines, both in the permanent and interim candidate market have become extremely overpriced. However now, the threat of budget squeezes, falling new vacancies and a candidate population grappling with rising living costs are going to impact the market.
That balance is tipping, and could tip very quickly, back in favour of the employer – but with conditions.
Imagine a see saw. For the past 12 months the candidate has been in control, tipping that see saw in their favour. Suddenly, and unexpectedly perhaps they have found themselves jolted skyward. Now it is the employer who can regain a position of power. Natural market forces suggest that there should be some levelling out. The question now is how quickly we can see it come into balance.
Balance will help everybody out.
What outcomes can we expect from this rebalancing?
I don’t see a mass flood of candidates to the market but we’re already seeing the effects of this shift in the balance of power. To take a real-world example, just recently we placed a position which is 5 days full time in the office! Just a few months ago this would have been almost unheard of.
Where organisations were having to work to candidate expectations, they are now saying: ‘flexible working was fine, but if we are being financially challenged, we must have sight of employee performance and potentially make cost savings.’ On a macro level the government is saying: ‘protecting expenditure means possibly going back to (dare I say it) austerity measures, its likely public sector workers will have to pay the price of the black hole.’
This creates is uncertainty in the minds of employers, and uncertainty is the impediment of the recruitment market. And part of their response so far is a growing push to get people back into the office. Many employers are now asking for a minimum of three days in the office – our recent Linkedin poll suggested that 25% of employers were looking to remove or reduce working from home. And candidates are saying “I don’t want to do that”, it’s too expensive.
Candidates don’t want to give up home working. Where they work is the number one priority for candidates right now. And then you have organisations whose main overhead is people, and they want their people to be visible. They want to know they are performing and being productive and under direct guidance and management due to challenging times.
This is creating a disconnect between what the candidate wants and what the employer needs, and I believe employers will eventually move the market. In my experience it will take around six to twelve months before we see candidates reacting to employer expectations and returning to the office more often.
The risk is a talent drain in the public and Not for Profit sectors
Unlike the private sector, salary banding and grading in the public and not for profit sector is less flexible or prescriptive. Organisations don’t have the luxury of deep pockets when it comes to what they can offer as benefits and bonuses. They don’t have access to the same toolkit as the private sector when it comes to helping with the cost of living.
When it comes to fields such as tech or HR there is a real risk that the private sector is willing to offer what the public or not for profit sector can’t and in functions where skills are in-demand and easily transferable then brain drain is possible.
There is also the danger of rising costs and redundancies. As we know when there are budget cuts the first scrutinised is head count, contractors finish and permanent employees need to pick up the slack. Subsequently the forward pressure on employees, delivering projects and meeting targets results in a return to experienced contracting staff who are now more expensive and scarcer than before.
But recent large lay-offs and redundancies amongst tech giants like Meta, Amazon, Twitter and Netflix as they look to save costs, keep investors happy and reassured and weather a potential recession. This means that the private sector may not be as good a prospect for candidates as promised. Public sector leaders and recruiters will be watching closely to see where the private sector goes.
Getting the balance right in 2023
In conclusion – we are going back to square pegs in square holes.
Over the past few years some employers have hired someone that does not meet all their requirements if they were a good cultural fit. They were happy to invest time in developing talent to hire quickly but have paid the price of making a wrong hire.
I see a trade off in expectations from both sides in the balancing act. Employers will have do more to retain and attract the talent they will so heavily rely on.
Forward thinking clients are already planning:
- Platforms to deliver professional learning and development to a remote/hybrid workforce
- Enhanced benefits packages and initiatives such as emergency loans and savings funds
- Supporting and rolling out mental health and well-being programmes
- Implementing digital/virtual communications and team working solutions
- Investing in automation technology and artificial intelligence to re-balance workloads
- More transparent with all employees around pay and salaries
Unless there is a mass cataclysm of deep cost cutting and redundancies, in the future, as vacancies slow and the talent pool remains sluggish, employers will be once again looking for candidates that meet their expectations and who are willing to accept their terms, however I believe that terms will shift and be more innovative and meaningful than they were four years ago.
Founding partner of Morgan Law, David Morgan is responsible for strategic development and involved in all areas of the business. With over 20 years’ professional experience as a specialist public sector recruiter, he ensures Morgan Law’s expert teams continually provide excellent recruitment experiences for both clients and candidates in the public and not-for-profit sectors.