Three years ago I wrote the blog Top 5 Recruitment Sectors to be in for the next 5-10 years. In 2015 we registered our 25,000th visitor to the blog and the subject remains very current.
As I write this blog, in Europe things remain pretty much the same with the Eurozone experiencing low growth which is projected to be 0.3 to 0.5% for Q1 and Q2 of 2016 .
In the UK we are projecting a much healthier state of affairs 2.4% to 2.6% which is great news for those of us in the Recruitment Industry.
Top 5 Sectors for next 5-10 years update
My views on what are the Top 5 Recruitment Sectors for the next 5-10 years remain unchanged and once again there is further evidence to reaffirm that these sectors remain the ones that will see the fastest grow:
- Information Technology
- Energy, Oil and Gas
- Emerging Technology application
Though Oil and Gas is currently in the doldrums our obsession with the motor car means it is only a matter of time before there is a rise in oil price and a return to the growth the sector experienced up until 2-3 years ago though its fair to say I do not see any recovery in this sector in 2016 with the earliest being 2017-18. I did think long and hard about taking this out and for those in Oil & Gas recruitment these are poor times. Many have switched into other energy sectors and making good progress in penetrating this market so good luck.
Top 5 Sectors for 2016
So what do I see as the main sectors for growth in 2016, will they be all the same?
No 5 – Healthcare
This may surprise many of you as recent government changes banning NHS Trusts from using off-contract agencies should mean a decline for some agencies operating in this sector who are not on frameworks. Those recruitment agencies that do work in this sector will tell you that despite the clamp down on ‘off-framework spend’ the demand for healthcare staff in this sector and the risk for hospitals not having the staff to cover shifts means there are still gaps in the market and vacancies to be filled. It is early days yet and may be the on contract framework providers will be able to meet the total demand but given the numbers of staff required I have my doubts.
It is in everyone’s interest that the NHS can procure staff on a better value for money basis but unless hospital managers can get better at resource planning and management or there is an increase in the availability of nurses, doctors and other healthcare professionals then its my opinion this sector is going to remain a high growth sector for years to come.
My reason for this is the economic forces are all against the government on this. Demand for staff is rising and will not abate for decades to come. I recently had a stay in hospital so had the opportunity first-hand to look at the situation. I have nothing but praise for the staff there however I see no change in the economics of supply and demand. The availability of supply of health care professionals has not suddenly increased. Trust Managers will be stuck between a rock and a hard place in filling jobs and shifts or risk closing a ward. Yes I fully expect there to be a short-term increase use of framework staff and a reduction in the use of off-framework suppliers but when framework providers cannot supply faced with a temporary ward closure what will they do?
Would love to hear your views?
No 4 – Accounting & Finance
The UK Services Sector (of which these sectors are a significant part), which represents 75-80% of the UK GDP, is seeing major growth in Q3 of 2015. This is good for UK Plc. as the UK is the world’s second largest exporter of services after the US and the trade surplus in services helps support the UK balance of payments.
So growth in this sector is not only good for those in recruitment in this sector but also for all of us.
The recovery of this sector has seen businesses willing to expand and recruit. In addition activity in the corporate investment and IPO world has been sited by Robert Walters as a key reason for the increase in demand for accountants.
In the public services the number of ‘Baby-boomers’ (those born between 1946-1966) leaving the sector has seen a huge rise in demand for accountants and professionals in this area too.
With margins being squeezed in several sectors from the Public Sector, to retail and on into the energy and manufacturing sectors accountants skills have never been in some much demand and like Robert Half many of our clients servicing this sector see the need for Accountants with Project/Change Management skills at a premium.
With solid growth being projected by the services sector for 2016 by Markit, then this is a good sector for recruitment agencies in 2016 and is why we have included it in our top five at number four.
May be you agree or disagree? Please share your views with us.
No 3 – Construction
There are many reasons why this sector could actually be listed at number one after all there are already significant capital projects underway in the UK in Rail, Nuclear, Road as well as the major house building commitment the government has made in the Autumn Statement. In addition there are already skill shortages and rate and salary rises happening.
George Osborne’s commitment to build 400,000 new houses, the largest house building drive since the 1970’s, with a £2.3 billion commitment means this sector is certain to growth. The continued shortage of skills across the UK as well as Europe already means margins and pay rates are all set to rise further.
With several agency clients in this sector Recruitment Training Group already know the first hand growth opportunities that exist. ALL of our recruitment agency clients in this sector are growing at between 25-75% year-on-year. Some of them are achieving 100%+ growth rates.
Our only reason for not listing this as the number one sector for growth is primarily due to the politics associated with the release of capital and funds by the government to house builders and their ability to actually convert that into construction activity and thereby a demad for staff.
We believe this inertia will see huge growth in this sector therefore in Q2-Q4 this year and well on into 2017/18.
Are you seeing the same growth? Again please let us know your views.
No 2 – Engineering
Recruitment Training Group has recently undertaking a white paper review on this sector, which will be published in the coming weeks. Our assessment of the sector and the supply and demand factors with predominate leads us to be extremely positive about this as a sector for growth in 2016. The number of capital projects already committed to and those that are also expect to ramp up in 2016 means we see the demand for skills will continue to growth.
Our business concern will be for major contractors having the ability to acquire and retain key workers. The major track and signalling projects in rail already committed to in the South West of England, Midlands as well as the East Coast Mainline are already sucking in large numbers of staff. With significant change on the London Underground and the continued extension of tram projects in Scotland, Manchester and elsewhere means there is a major skill shortage. Couple this with HS2 and potentially HS3, which the government appear increasingly committed to, we see this Rail Sector as being a good one to be in.
Nuclear with all the new projects announced recently such as Hinckley C, Sizewell C and Bradwell B plus the Wylfa project on Anglesey and the additional ones being considered means there is a huge increase in demand for skills in this sector too.
In aerospace and defence skills are going to be in demand there and the UK is seeing a resurgence in our automotive sector with our leading brands, Jaguar Land-Rover, Bentley, Nissan and BMW/Mini increasingly being seen as world leaders the demand for engineering skills from all parts of the sector are rising.
All of this sudden increase would be fine if it wasn’t for the issues of an aging workforce. Over 90% of the new recruits joining the engineering sector in the next few years will be merely replacing the ‘Baby-boomers’ who are leaving it.
The demand for skills in this sector is increasing and the supply and availability looks in decline.
According to the 10th Engineering and Technology Skills and Demand in Industry report produced by the Institution of Engineering and Technology (IET), UK firms report a strong demand for new engineering and technology staff – 53% of employers are currently seeking new recruits compared to 51% in 2014
This is not a one hit wonder. Whilst it takes a few weeks to build a modern house a nuclear power station or a mainline electrification can take several years to complete.
Some of you could argue that some of the skills in this sector are ‘construction’ skills, which I will concede and the two sectors fate is clearly intertwined. It is good for those agencies with good relationships in one but not the other to open trades or technical divisions. It’s a strategy we agree with where all the other factors are equal.
Recruitment Training Group support many agencies in this sector and we are encouraged by the improvement in margins, pay rates and salaries though some employers are slow in waking up to the consequences of project and business failure where they lose key staff.
Again please share your thoughts.
No 1 – IT & Digital
IT and the digital technologies continue to be the number one sector for growth and skill shortages globally as well as in the UK. My conversations with recruiters, resourcing functions and technologists lead me to believe that the demand in this sector will not change dramatically for five years or more.
There are three main drivers, which are fuelling this:
- The relentless advancement of technology itself.
- The constant application of technology and innovation by businesses seeking competitive advantage
- The lack of adequate levels of investment in training and skills in the sector compared to demand.
The overall effect of this is there are constant skill gaps emerging. Various estimates exist for the gap. In the autumn the charity Go.On UK published a report claiming that 12 million people and a million small businesses do not have the digital skills to survive in the digital era.
Go On UK, chaired by the government’s former digital advisor Baroness Martha Lane Fox, is warning of a threat to economic growth, productivity and social mobility if we don’t close the skills gap.
The Guardian reported in September that the UK already has the largest internet-based economy in the world (based upon GDP) that is according to the Boston Consulting Group so this issue is not going away. They state this growth is resulting in a surge of demand for jobs, with recruitment in digital outperforming all other sectors by 2020.
TekSystems researched the issue in 2015 amongst CIOs and found both IT leaders and IT workers agree that skills matching is difficult — 81 percent of IT leaders indicate it is extremely or moderately difficult to find quality candidates and 73 percent of IT professionals say it is extremely or moderately difficult to find positions for which they are qualified. Sixty three percent of IT professionals surveyed cite unrealistic technical expectations as the biggest challenge to finding a job.
“The survey reinforces what we already suspected: The IT skills gap is real and is having a significant impact on organizations’ abilities to be successful — it can lead to a vicious cycle of lower employee morale, inefficiency and attrition,” says Jason Hayman, TEKsystems Research Manager.
Increasingly the education sector is being blamed for not producing the right calibre of people. The Huffington Post weighed into the debate in the autumn with the following statement:
“An in-depth look at the state of the UK job market reveals a very troubling reality: the skills young people are learning in schools simply do not correspond with the needs of modern businesses. According to a recent Skills Crunch report, two-thirds of companies fear a lack of skilled workers will put the brakes on Britain’s current economic recovery.”
As someone who consults on ‘employability’ with several universities, that statements a bit hard as a typical student takes three years to educate and a course potential 6-12 months to write and have approved so that’s a four year lead time which makes it very difficult for students to be trained in all the latest techniques and hard skills.
Typically all universities can do is look to teach some hard skills but to help to develop people’s competencies to make them trainable in the future. Lets not forget that jobs such as Blogger and Vlogger were not really sort after 5 years ago and many of the technologies used in the digital space today not even released.
What this evidence does is reinforce my belief that IT and Digital Technology recruitment is the sector to be in for the next 5 years certainly and niche’s such as IT/Cyber Security, Business Intelligence, Big Data, Mobile App development, Front-end development and Networking and Infrastructure are the hot sectors with such skills as Grunt, React, Bootstrap, SASS and Apple Swift all set to become highly sort after hard skills in 2016 according to Technojobs.
Our opinions are based upon our experience of working with just under 40 recruitment agencies across all sectors in the past 12 months. With all of them growing at annual rates of over 25%+ year-on-year and some 100-150%, we see healthy times ahead for the UK Recruitment Market.
You may have a difference of opinion and have experiences, which are not so positive so please contact me, [email protected] and let us know or share your thoughts.
We’d love to hear them.