State of the Nations - Part 1

Everyone else is doing it: Obama, Cameron, Abbott and Key it so thought we should too. Our view on labour market trends in: UK, USA, Europe, Australia, New Zealand and Singapore. It's a long post as we cover each country. Part 1 covers UK, USA and Europe.
Part 1

Probably the most surprising of our markets in 2013, the UK job market has held up very well in our view. The UK seems to be getting its act together economically and it is certainly a much busier job market than most of Europe. That said, the confidence levels in 2013 did not seem to be very high – research by Monster and GfK suggested that candidates were not feeling as confident as the broader economic data suggests. Overall unemployment ended the year down at 7.1% and forecasts suggest it will continue to fall in 2014 (the NIESR forecast is 6.6%).

Other research from “High Fliers’ suggested that the graduate job market has improved and is now looking better than at any time since 2007. However it also showed that earnings have not moved much, with starting salaries projected to remain static for the fifth year in a row. That said, it does seem confidence is returning for employers and the REC has its surveys showing lots of positives with e.g. 65% of employers surveyed saying they will be expanding the workforce versus only 8% forecasting any contraction. There also seem to be several studies out, all suggesting that people are desperate to change jobs. We are a bit suspicious of these surveys and suggest employers not worry unduly that all their staff will suddenly leave. We think candidates will still be somewhat wary before moving from one job to the next.

At the start of the year we certainly saw that the job market in London and the South East was the most buoyant. It was by no means a boom but employers were advertising and there were some shortages evident. A year later it seems the rest of the country has caught up and it’s a much more even picture with demand up in general. The Reed job index at 178 is some 29 points higher than a year ago . Whilst we have a soft spot for Reed (I used to work there) their experience does seem to chime with others and what we are hearing from partners and clients.
Areas like IT and Engineers are still in short supply and some IT skills are attracting increased salaries but other sectors are now catching up. We have even – shock horror –seen evidence that demand for bankers is picking up again…

In 2014 we expect to see more employers seeking staff and also that candidates wont be as plentiful as perhaps they were a year or two ago. We also think salaries will also start creeping up during the year.

What a difference a year makes. In the year to November the US economy added 2.1million jobs. From a social point of view, half of these jobs were in the relatively unskilled sectors which make it a bit different from many other markets where growth has been primarily driven in the high skill areas.

Overall though, the US still has a labour problem and there is evidence that many workers have simply dropped out the market. There are also still layoffs happening and this December’s job growth figures were a bit of a shock being the lowest all year. That said unemployment still ended the year at - in our view – a very creditable 6.7%. Like the UK and NZ its is also on a downward trend being having been around 10% in 2009.

Like Europe the US is a huge market covering a huge area and what we are seeing is that demand in the West Coast cities for sectors like technology staff is still very high but this drops off in other centres. We are seeing employers keen to recruit but they are – “discerning” – is perhaps the best way to put it. Managers and professionals with relevant experience are still in demand but we certainly are seeing employers being choosier over whom they hire. Given the famous flexibility of the US labour market and its “hire and fire’ culture this has been a bit of a surprise. Any emphasis on screening clearly lends itself to our products so it will be interesting to see if this continues into 2014.

What can we say… Overall unemployment within the euro-zone is expected to stay at 12.2% and even within the wider EU, it is expected to only dip slightly from 11.1% to 11% over 2014. These are the highest average unemployment rates we are seeing.

However if you take countries individually then things look very different from the overall average.

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The graph shows unemployment across the EU. Unemployment ranges from Austria at 5% to Greece at 27%. Indeed there are 10 countries with unemployment lower than 8%. This suggests that you really need to think of Europe at a more local level when considering the job market. From what we have seen in client recruitment, skilled roles can still see quite tight labour markets in many parts of Europe. Those clients based outside Europe looking to increase there European headcount should not be too influenced by the general European news and assume its all gloom and doom. Recruiting conditions and supply can vary significantly across what is supposed to be a unified labour market.