Multinationals will help trigger employment growth
We now have just over 1.8 million people in the workplace, compared to a peak of just shy of 2.2 million in the summer of 2009. Whilst the rate of decline in numbers employed has slowed, the figures are pretty depressing; all the more so since the downward trend was seemingly halted in the second quarter of this year, when employment showed a modest increase up to 1.82 million. That now appears to be something of a false dawn for the employment market. Yet, in this same year, recruitment firms are reporting significant growth, so what is going on? How do we interpret the jobs market in 2011 and what does it bode for 2012?
Closer examination of the statistics tells a familiar story. There have been significant drops in traditional, domestically-focused sectors. Agriculture, industry, construction, retail, accommodation and food services saw large drops in employment, all relating to the contraction of the domestic economy. Public administration also saw a significant fall as the Government’s commitment to curtail employment in the public sector has had an effect. Looking for signs of life, we find it where we would expect to; transportation and storage is up, as are information and communication and support services. This is the export sector flexing its employment muscles, but unfortunately, not even the stellar performance of the export sector can make up for the rest of the economy.
So, activity in the jobs market in 2011 has very much been concentrated on those businesses trading or supporting trading overseas. No wonder we make such a fuss over our competitive corporation tax. Without it, the case for all those overseas multinationals who make up the majority of such businesses, becomes a little tenuous. What life there is in the economy would flicker out without these firms.
Looking at our own statistics in Hays, we can also see a shift in hiring patterns to more senior level roles. Over the past six months, we’ve seen a doubling of hiring activity in middle-to-senior management roles, whilst hiring at the lower ends has remained relatively stable.
When businesses emerge from retrenchment into growth, it is typically more strategic, and thus more senior appointments that are first on the agenda. We have seen this shift in hiring patterns in most sectors, thus giving credence to the notion of a jobs market moving, slowly, from decline into stability and growth.
This explains improvement in the recruitment industry, itself a pretty fair weather vane of the economy. Most established businesses are significantly ahead year-on-year. Our own statistics in Hays show hiring activity some 40% ahead of 12 months ago. Within this, there is demand for fixed-term contract positions, growth in this area is 80%.
What to expect in 2012? Clearly, the European economy is fragile, and sensible predictions for the coming year must remain cautious in the current scenario. But there is a case for optimism.
Exports are predicted to continue rising, enough to drive employment. The skills gap in the IT sector will gain more headlines in 2012 as companies scour the globe for the technical skills to develop and support products and services from Irish hubs. We’ll see demand for professional, technical and skilled staff with a non-English native European language to support operations across EMEA region.
The area of professional services is also recovering. The Big Four are hiring in higher volumes and starting to worry again about how to attract and retain the best and brightest, rather than worry about how many they might need to let go.
I expect to see a positive shift in employment in construction. Commercial agents are hiring sales staff and architects admit to being busier than last year.
Other trends we can expect to see in 2012 are the increasing popularity of conversion courses. Such courses can provide a route back to employment.
As the competition for technology skills heats up, rates and salaries rise and securing permanent staff gets difficult, employers will start to think about in training. Employers will upskill their own people or partner with firms like Skillsnet to ‘grow their own’.
The outlook for the jobs market has improved. Whilst job losses continue, hiring activity is better than at any time in the past two and a half years. It is only a matter of time before the lines on those graphs cross and we see a return to employment growth. Led by multinationals, I expect to see that growth return in the latter half of 2012.
* Richard Eardley is managing director of Hays, professional recruitment experts
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