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The chief of one of the UK’s biggest recruitment platforms says the jobs market is about as bad as he’s ever seen, with official data painting a complicated picture.
So what’s going on? Christian May asks in this episode of Week in Business.
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Produced by: Christian May, Joseph Curay Teneda, Emmanuel Nwosu
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0:00
is there a crisis unfolding in the UK
0:02
jobs market the chief of one of the UK's
0:04
biggest recruitment platforms says the
0:06
jobs market is about as bad as he's ever
0:09
seen it official data paints a
0:11
complicated picture so what's going on
0:14
welcome to the week in business with me
0:15
Christian May
0:20
first up let's look at the numbers and
0:21
the headline unemployment figure 4.6%
0:24
the highest it's been for 3 years now
0:26
before the pandemic it was around 3.8%
0:28
8% spiking during COVID before falling
0:31
to around 3 and a half% by the middle of
0:34
2022 stay with me now since then with
0:36
plenty of peaks and troughs the rate of
0:38
unemployment has been trending higher
0:40
and we know that the start of this year
0:42
was pretty fragile culminating in a loss
0:44
of more than 100,000 payroll employees
0:47
in May there are now around 270,000
0:50
fewer payroll employees than this time
0:52
last year meanwhile the official
0:55
employment rate has remained steady and
0:57
this might seem contradictory and it is
0:59
but it can be explained by a rise in
1:01
economic inactivity people who are not
1:03
actively looking for work that includes
1:05
the retired students and those on
1:07
sickness benefits those people don't
1:10
count as unemployed it's also the case
1:12
that many of the people who have
1:13
recently lost a job and are now looking
1:15
for another one are not yet counted as
1:17
unemployed writing in City AM this week
1:20
James Reid CEO of Reed Recruitment
1:23
pointed out that the number of vacancies
1:25
is falling and it's falling fast if the
1:28
unemployment rate rises that's the
1:30
number of people looking for work while
1:32
the number of vacancies in the jobs
1:33
market falls well I don't have to spell
1:36
that out as Reed wrote official
1:38
statistics show 35 consecutive periods
1:41
of decline in vacancies next month it
1:44
will be 3 years with vacancies falling
1:46
from a peak of around 1.3 million then
1:48
to 760,000 now he says his own business
1:52
has seen a 25% fall in advertised
1:54
vacancies year oneononear he says that
1:57
in all his decades working in
1:58
recruitment he has never seen anything
2:00
like this the UK is now the only
2:03
developed country to have job postings
2:05
remain below prepandemic levels after
2:08
the 2008 financial crisis vacancies
2:10
declined for 16 months then they started
2:13
to return employment was actually a rare
2:15
bright spot in the UK economy during the
2:17
following years of austerity and belt
2:19
tightening we'll come back to that let's
2:21
look at some particular parts of the
2:23
labor market today let's look at
2:25
graduate jobs jobs website indeed
2:28
revealed this week that graduate jobs
2:29
are at their weakest level since at
2:31
least 2018 down 12% compared to just a
2:35
year ago now there's a big debate about
2:37
the value of a degree and the kind of
2:38
graduates we're producing but that's a
2:40
wider issue i want to focus on the
2:42
numbers and the numbers aren't pretty
2:45
not only are there fewer graduate jobs
2:47
on offer but there are also more
2:49
graduates chasing them the number of
2:50
university levers climbed from 830,000
2:54
in 2018-19 to just over a million in
2:57
2023 24 competition for graduate jobs
3:00
has never been tougher as employers ease
3:03
off taking on new recruits consider the
3:06
likes of the big four accountancy and
3:08
consulting giants Deote EY KPMG and PWC
3:11
traditionally these firms would hoover
3:13
up graduates but not anymore they're
3:16
cutting jobs and pulling back sharply on
3:18
graduate recruitment and guess what
3:21
they're expanding their use of AI as
3:23
James Odow of executive search firm
3:25
Patrick Morgan explains the big four are
3:28
looking at AI very seriously to
3:30
replicate junior work more
3:32
cost-effectively they're also expanding
3:34
their offshoring efforts creating
3:36
cheaper jobs in places like India and
3:38
the Philippines and they're not alone in
3:40
this ctm reported recently on the
3:42
growing number of businesses recruiting
3:44
remote workers in cheaper countries such
3:45
as South Africa in a direct bid to avoid
3:48
the increased cost of employing people
3:51
in the UK and here we get to the nub of
3:54
the problem why is this happening why is
3:57
unemployment increasing why are the
3:59
number of vacancies falling why are
4:01
firms putting off headcount expansion
4:03
and shunning graduates well there are
4:06
lots of reasons of course there are one
4:08
of which is that government tax changes
4:10
have made it much more expensive to hire
4:13
people and incoming changes to
4:14
employment law will make it a more
4:16
complicated and higher risk thing for
4:19
businesses to do if you increase the
4:21
cost of something in this case jobs you
4:23
will get less of it now I mentioned
4:25
earlier that employment was a surprising
4:27
bright spot of the Cameron Osborne era
4:30
and it was largely thanks to the UK's
4:33
flexible labor market employers could
4:35
hire with relative confidence that
4:38
confidence doesn't exist anymore the
4:40
economy is bruised from Trump's tariffs
4:43
and global headwinds yes of course but
4:45
the increase to national insurance added
4:47
insult to injury and the looming
4:49
employment rights act with its pages and
4:51
pages and pages of employment red tape
4:53
is enough to make any employer think
4:55
again before taking on new staff ai
4:59
automation cost cutting these are the
5:01
logical responses to a situation where
5:03
employers do not have the confidence to
5:05
create jobs but technological change is
5:08
the undercurrent here entry- levelvel
5:10
jobs have fallen 32% since Chat GPT's
5:14
commercial breakthrough in 2022 james
5:17
Reed says he's deeply concerned about it
5:19
warning that we may be going into a
5:21
period of very substantial disruption in
5:23
the UK jobs market over the next 5 years
5:26
not dissimilar to what occurred in the
5:28
1980s for a lot of bluecollar workers
5:30
except this time round it's the white
5:32
collar jobs that are being affected that
5:35
is a challenge for everyone from schools
5:37
and universities to employers and
5:39
government but it's a challenge made
5:41
harder and more urgent by policy
5:43
decisions that have hit the jobs market
5:45
hard even as it tries to adapt to
5:48
structural changes not all crises come
5:51
with an explosion some are slow drawn
5:54
out they can creep up on you and that's
5:56
the kind of crisis that many now fear is
5:58
gripping the jobs market well that's it
6:01
from me this week to stay uptodate and
6:03
in the know with the city app and on
6:05
cityam.com and I'll see you all next
6:08
week
6:13
[Music]
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