Rutherford Cross’ Mollie Rogerson discusses the current job market as we approach the end of 2022, and reflects on how economic challenges are driving an increase in interim and contract hiring in finance.
Having seen a busy permanent job market this past year, as we approach the end of 2022, we are beginning to see this slow down. The impact that several key factors are having on both employees and businesses are starting to become more apparent and we will possibly begin to see a change in hiring trends.
The impact of economic and non-economic developments in 2022 are beginning to be felt in the job market with opportunities within the Interim and Contract space beginning to increase.
Cost of Living and Inflation
In the UK we are seeing the cost of living rising, with a 40 year high as of April 2022. Whilst there have been measures put in place to help protect the most vulnerable, these increases will affect everyone. Energy prices have risen exponentially between August 2021 to August 2022 with both domestic gas (95%) and electricity prices (54%) going up.
Inflation has risen in part due to the increase in salaries in the market and we have seen a higher number of candidates than usual move externally to new opportunities to take advantage of the higher salaries being offered.
Due to pandemic related supply shortages, consumer goods inflation has been on the rise in many countries since 2021. The conflict in Ukraine has also led to higher product pricing, in turn increasing inflation across the globe. It was reported by Eurostat in August 2022 that the UK’s annual inflation rate of 9.9% was higher than in some comparable economies such as Germany (8.8%) and France (9.1%). The UK also had a higher inflation rate than the Eurozone average of 9.1%.
Often during times of economic uncertainty the recruitment of new staff is paused and a hiring freeze is put in place. This uncertainty can result in companies being reluctant to take on long term cost commitments such as permanent hires.
It is widely known that retaining current staff can be more economical than running the process to replace them. This has resulted in an increase in the number of counter offers to retain existing employees.
If recruiting in the current market it can be beneficial for hiring managers to consider factors such as their company’s long-term goals, if there is an immediate need, and what the current candidate market is. By looking at the organisation’s medium to long term goals a well-planned hiring strategy can be put in place allowing, in some cases, for businesses to utilise the potential increase in candidate seeking new opportunities to their advantage.
The Market in Scotland
Reflecting on the last couple of years, within the accountancy and finance space, we have seen a high demand for top talent within both the interim and permanent markets in Scotland. As we have been recovering from the effects of the pandemic a high number of businesses identified a need for growth within their teams resulting in a candidate driven market. This had shown no signs of slowing throughout this year however due to recent political and economic events we have now seen this begin to change within the permanent market.
We are dealing with a number of businesses whose costs of production or of delivering their service have increased significantly this year due to the rise in transport of goods, heating and lighting of offices or factories, salary rises and this years increase in VAT.
Pros of Hiring Interim Talent
There can be many benefits to hiring interim and contract workers during times of uncertainty. In doing so you can continue to maintain staff moral and the keep on top of the workload of permanent staff so that they feel less overwhelmed.
A primary benefit to hiring a contractor is that they can be a specialist in key areas for your business whether it be their technical or sector expertise. At times when an organisation may have project work needing completed a contractor can come in and hit the ground running, ensuring that the project runs smoothly and is completed within budget and on time. There are a number of high calibre finance professionals in the Scottish market who specialise only in the interim market.
In situations such as this it is also beneficial as there can be more flexibility in hiring contract staff. We often see interim contracts being extended due to the significant benefit they bring to the client. Equally if company dynamics change then notice can be served to the interim if their services are no longer required.
Speed of Hire:
The process of souring and onboarding an interim is much shorter, often with new hires being identified and starting within a couple of weeks. Bringing in temporary staff during a time of a hiring freeze can also be advantageous as these team members are not included in the company’s head count.
Bringing in contract staff can also reduce costs for the company. By the contractor not being on the company’s payroll there is no fixed annual salary to the company and therefore no long term commitment. As well as this a day rate contractor is only paid for days worked as either they will be Ltd Co. or if PAYE day rate holiday pay is accrued and paid separately through the Agency.
2022 has had a big impact on the UK due to the rise in the cost of living, inflation, new Prime Ministers, and rising interest rates. All of these factors make predicting what will happen in 2023 difficult. It is widely thought that most of these will continue into 2023 and play a big part in the future of the UK economy.
All of this will influence how organisations look at and approach their hiring and so we expect to see an increase in Interim and Contract vacancies in the Scottish market. From reduced staffing cost and head count to increased flexibility and specialist skills temporary staff can be of enormous benefit to businesses during times of uncertainty.