Employers in many industries are struggling to hang on to workers in the booming jobs market. The pressures are being further exacerbated by a labour shortage caused by Brexit and the pandemic, which has driven up wages. The Bank of England estimates that the labour market is 400,000 smaller than it was before Covid-19.
Companies have reported their highest employment levels since before the pandemic, underscoring the strength of the labour market even as the broader economy slows. The unemployment rate has fallen to 3.8 per cent, raising concern about labour shortages in healthcare, education, and construction. The skills and labour shortages are already proving a constraint on growth in many tech films. And now the tech sector is experiencing is a graduate shortage, as blue-chip City employers once again hoover up the cream of the nation’s talent crop straight.
One City law firm has given its junior lawyers pay rises totalling 24 per cent over the past six months, meaning graduates join on a starting salary of £120,000. Herbert Smith Freehills, one of the Square Mile’s top ten high-earning law firms increased salaries by another 14 per cent in its latest round of pay increases - having already boosted salaries for junior lawyers by 10 per cent last December. Solicitors fresh from their two-year training contracts are the main beneficiary of the salary war. Five US-based firms now pay their London lawyers more than £160,000, almost triple the rate offered to the best-paid trainees. Law firm Macfarlanes has said it was awarding an uncapped bonus to all staff of 11.23 per cent.
Adrian Smith, senior director of operations at Randstad said: “The tech is not quite in the same shape as City’s advisory firms at the moment. The economy is sliding into recession as inflation as interest rates rise, and private market valuations for tech companies have fallen. Paris is increasingly challenging London to become the venture capital of Europe. In comparative terms, the UK’s tech sector haven’t got the resources they had 10 years ago to fight off the competing demands of the City.”
“As a result, a technology skills shortage at the top of the talent tree, is a risk to business and economic growth. There is a strong economic need for more skills for digital transformation projects. And now, just when we need more young people to join the tech workforce, we have a comparative dearth of A-player talent as the City re-exerts its pull on the UK’s milkround.”
UK government figures show there was a 50 per cent rise in technology job vacancies advertised last year and that almost half of employers were struggling to recruit for digital roles.
Adrian Smith says tech firms have a number of potential solutions, short of slavishly following the financial services sector. “First, they must acknowledge that the graduate employment market for tech and the City cannot completely diverge. Yes, larger employers are investing in skills themselves but cash-strapped SMEs can’t. That’s a problem as employers spend just half the European average training their employees. They must also broaden the approach to graduates. As part of an attempt to tackle the skills shortage, Google has said it is teaming up with business to offer recognised certificates for training in areas where there is high demand, such as data analytics. The courses are online and take between three months to six months to complete. Other technology players including Microsoft have implemented similar programmes.
“Higher up the food chain, they can access a wider talent pool by considering contractors. Useful try-before-you buy, potentially. They could also try to game the system with some title inflations - offer status instead of cash to help win the war for talent. It’s a powerful recruitment tool and cheaper than paying that sort of money - incentivising staff without ramping up the wage bill. And, in the long-term, as a country, we must invest more in education as well as research and innovation. We also need to make a job in tech more appealing to women - will also be part of the solutions. It’s a male dominated environment and can be intimidating for young women. We can do that by getting into schools early. Local employers need to deepen engagement with children and liaising with with local colleges to identify the skills of the future ”
– ENDS –
Notes to editors
More Information: James@AirCoverPR.co.uk / 079 0320 7726
About Randstad: Founded in 1960, Randstad is the world's largest provider of recruitment and HR services (by revenue, gross profit, and market share), employing more than 40,000 people in 5,000 locations. In 2021, it generated revenue of almost €25 billion last year across 38 markets. Last year, Randstad helped more than two million candidates to find a job; trained over 450,000 people; and advised 235,000 clients on various aspects of their HR strategy - from talent acquisition to total workforce management.