UK Labour Market Update: September 2018

Overall trends

UK Sector and Location Attractiveness

The last few months have seen bouts of optimism and pessimism around the prospect of a post Brexit deal between the EU and the UK, but still nothing is certain yet and many businesses are still erring on the side of caution until a deal is finalised by revisiting Plan Bs. Whilst the pre-Referendum doomsters have been proved wrong to date, there are many companies that are clearly concerned about life post-March 2019. The reality is that the date is rapidly approaching and there is not too much businesses can actually do, other than make contingency plans based upon unknowns and uncertainties. 

For many businesses however, BREXIT has relatively little impact, and for others there are many other important factors and drivers for market transformation and business disruption. The War for Talent is one theme that is consistent across sectors and perhaps one of the reasons is that with levels of unemployment that have not been this low for decades and record levels of employment, labour economics does not favour the employer. Businesses are competing for very similar talent across different sectors, whether it is at leadership level, digital transformation, data scientists or coders, candidates could be considering opportunities from a range of employers. Where and how you operate is critical to the success of your business within this labour dynamic. Let’s consider both.

Where you operate

The mobility of work now means you can organise your business very differently. The old model was to have an office building in a location that was good for marketing, sales, accounts, analytics, innovation and product development. The new model is to develop Centres of Excellence for different functions and allow them to operate in geographically disperse models – finding the best location for the skill sets they require. This may not work for all functions, as one needs to balance the benefits of this approach with organisational cohesion, but Centres of Excellence for product development, analytics or support services are now very common.

How you operate

The workplace plays a pivotal role, not only in the effectiveness of the organisation, but also in the war for talent. An effective, digital workplace that allows employees to work to the best of their ability is now all but expected by the majority of job seekers, but as we tackle an incredibly low unemployment rate and average tenure at companies is reducing all the time, the bar must be raised in order to attract and retain the best people. The workplace can be used by employers as another string to their bow in the war for talent; this goes beyond the physical space, though this is obviously an important part of the story, and delves further into the cultures, behaviours, protocols and identity of the company. These things are largely intangible and are therefore some of the hardest aspects to curate successfully, but are nevertheless what differentiate the outstanding companies from the mediocre.

Given the desire to be competitive in the labour market, we have presented below data from LinkedIn which shows the year-on-year and month-on-month changes in LinkedIn* profiles by region and sector in the UK. Clearly this is only part of the picture but gives an interesting snapshot into the current job market.  

Regional and sectoral hiring trends – UK August 2018 report

Commentary:

• London was the only region that experienced a decrease in hiring for both its Month on Month and Year on Year measures.
• The North East experienced the highest Year on Year growth rate experiencing a 17.2% increase compared with the same time last year. It also topped the Month on Month growth measures, followed by the South West and North West.
• The Legal sector registered the largest Month on Month increase in the labour market, closely followed by IT Hardware and Networking. 
• Real Estate recorded the largest growth in hiring rates compared with 2017, followed by IT Hardware & Networking and Energy & Mining. 
• The Media & Communications and Entertainment sectors both registered negative growth in June. Both experienced a decline in the Month on Month hiring rates and negligible increases for the Year on Year growth rates. 

*Note: The LinkedIn Hiring Rate is the percentage of LinkedIn members who changed the name of their new employer in the same month that they started their new job. This number is indexed to the average monthly value for 2015–16. We also show this number adjusted to exclude the impact of seasonality on the Hiring Rate, such as the spike in hiring at the beginning of the year.

Knight Frank's EMEA Strategic Consulting Team works with large and small business helping them to align property to business goals and objectives and, in turn, making them more competitive and fast moving. The team is one hand to discuss any of these issues in further detail.