Market Report Q3 2010 (It)


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Market Report Q3 2010 (It)

  1. 1. IT Market Report Quarter 3 2010 Compiled & designed by Neil Hulse, Adecco Group
  2. 2. Contents Introduction 3 Economic outlook Headline market indicators 4 UK GDP growth 5 World Cup revenue generation 6 BCC economic forecast 7 Regional metrics North East & North West 9 Yorkshire, Midlands, East & South East 10 London 11 South West & Wales 12 Scotland 13 Northern Ireland 14 Table 1 - Labour market statistics 15 Market indicators Public sector hiring 16 Unemployment figures 17 UK jobs market 18 The IT market Demand for IT staff 19 Cloud computing 20 IR35 21 Key market indicators: Skills 22 Job functions 23 Industry sectors 24 IT news 25 Sources Computer Weekly | The Recruiter | The Times | Financial Times | Resourcing | | | | | Salary Services | The Skills Market Report on Jobs | BBC Business | Bank of England | CIPD | National | The Telegraph | Office of National Statistics | Reuters | Centre for economics & business research (CEBR) | The Recruitment & Employment Confederation (REC) | E-Skills | UK Bank of Scotland | CWjobs | British Chambers of Commerce
  3. 3. Introduction The latest set of labour market figures makes for positive reading, with a sharp rise in the number of people in work, fewer economically inactive, and a chunk sliced off the unemployment figures. The economy is looking much rosier, underpinned by UK manufacturing’s strongest growth for 15 years, the construction industry growing by over 6%, positive GDP forecasts for 2010 and 2011, and earnings growth of almost 2% for the quarter. However, any thoughts that the UK is in the pink are ill-placed. Unemployment is forecast to peak early next year and the need to significantly cut the budget deficit, strengthen the banking sector ،، Recruitment models will and reduce personal sector debt will limit UK growth. become bespoke to service client needs The government's planned cuts to public spending over the next five years have hit ٫٫ confidence, with murmurings that the UK could be heading for a double-dip recession. Unemployment has yet to start falling significantly, and the expected public sector job losses mean another rise is not being ruled out. Despite these impending public sector cuts, business confidence remains buoyant. It’s no longer a case of wringing out the last drops of resource available, but more about exercising caution when dipping into the money pool. As recruiters jostle for business it’s likely that their recruitment models will become bespoke to service client needs closer than ever before. The ‘one size fits all’ philosophy may just be a thing of the past. Neil Hulse Business Analyst, Adecco Group 3 3
  4. 4. Economic Economic outlook outlook Headline market indicators - The UK economy has recovered for two successive quarters - Unemployment is expected to increase over the next year but at a slower rate - The UK’s economy is set for an annual GDP growth of 1.3% - Q2 unemployment rate was 7.8% and there were 2.47m unemployed people - Annual growth in average earnings was 3.6% in the private sector and 4.4% in the public sector - There were 486,000 vacancies in Q2 – up 10,000 on the previous quarter - Private sector employment declined by one million people during the recession UK economy enjoys second quarter of growth The UK economy grew by a faster-than-expected 1.1% in the second quarter of the year, according to official data. The figure - a preliminary estimate from the Office for National Statistics (ONS) - was almost double the 0.6% growth rate expected by economists. Manufacturing It was also a marked pick-up in pace from the is performing 0.3% growth of the first three months of the year. far better than Much of the growth came from the key services services sector, which makes up about three-quarters of the UK economy. Manufacturing sees strongest growth for 15 years UK manufacturing in May grew at its fastest pace in more than 15 years, increasing by 0.3% on April, whilst David Frost, Director General of British Chambers of Commerce, announced that manufacturing is “performing far better than the services sector”. Manufacturing output rose by 4.3% on the same month a year ago, the highest rate since December 1994, the Office for National Statistics (ONS) said. The increase was driven by the machinery and equipment industries, as well as basic metals and metal products. The ONS's wider index of production also rose by 2.6% on the year, the fastest pace since June 2000. On a monthly basis, industrial production rose by 0.7% in May. 4
  5. 5. £22bn wiped UK recession deeper off the UK than first thought Britain's record recession was even deeper than economy previously thought, and the economy could still have contracted in the first quarter of this year were it not for hefty government spending, official data has shown. The Office for National Statistics left its earlier estimate of Q1 growth unrevised at 0.3%, giving an unchanged annual decline of 0.2%. Britain faces mixed prospects for Q2, after data released at the same time showed that services output contracted 0.3% in April, the biggest fall since January. During Q1, the biggest rise in government spending since Q4 2008 added 0.4% to GDP growth, alongside a 0.9% contribution from gross capital formation. Imports rose and exports fell in roughly equal measure. UK GDP growth, quarter on quarter Source: ONS The figures suggest a major rebound in exports will be needed to maintain growth when planned government spending cuts take effect from later this year. As part of a major annual revision of previous quarters' GDP data, the ONS said that the economy contracted by 6.4% between the second quarter of 2008 and the third quarter of 2009, more than the 6.2% previously estimated. The resulting fall was the biggest since quarterly records began in 1955 and wiped a total £22bn off the economy - £2bn more than previously thought. Britain's deficit with the rest of the world widened to £9.6bn in the last three months of 2009, more than twice as much as expected and compared with a surplus of £521m in Q4 2009. 5
  6. 6. World Cup generates £1.6bn for the UK economy The World Cup generated an estimated £1.6bn short-run boost to UK GDP in June & July due to increased consumer expenditure and business spending on advertising. ASDA estimated that beer and wine sales increased by 37% and 41% respectively 2018 World Cup as people held “World Cup parties” – compounded by would create the good spell of weather. revenue and jobs The knock-on effect of the World Cup will be the distorted retail sales figures as consumers are likely to have brought forward consumption that would have otherwise occurred later on in the year. …but hosting 2018 World Cup is the real golden goose The British economy would be boosted by £3.2bn if England hosts the 2018 World Cup, according to a study by PricewaterhouseCoopers. Setting out the economic case for England's bid, a group of business leaders including Lord Alan Sugar and the British Airways chief executive, Willie Walsh, said “Landing the tournament will create revenue and jobs, helping to transform communities in many cities," the group said in a letter to the Daily Telegraph. "It will open up opportunities for young people to learn about teamwork, competitiveness with integrity and other skills needed in business." It is expected that the 2018 tournament will go to Europe, where Russia plus joint bids by Spain/Portugal and Holland/Belgium are up against England. UK economy needs to grow by 2.5% to offset job cuts The UK economy will need to grow by at least 2.5% per year, to offset impending public sector jobs cuts, with only slightly less growth having dire consequences for job prospects, according to the Chartered Institute of Personnel and Development. The UK recorded a 49,000 fall in unemployment to 2.47m in the three months to May and a fifth successive fall in the claimant count, which was down by 20,800 to 1.46m in June. The Office for Budget Responsibility’s (OBR) current forecast predicts the economy will grow by more than 2.5% each year The economy will cut from 2012-15, while employment levels are predicted to grow 300,000 jobs by 2012 next year (2011) and continue to rise through to 2015. The CIPD, by contrast, on only slightly more pessimistic growth assumptions, forecasts the economy will cut 300,000 jobs by 2012 before renewed job creation boosts employment by 2015 to around 100,000 but far short of the 1.3m extra jobs the coalition government is hoping for. 6
  7. 7. British Chambers of Commerce UK Economic Forecast highlights - New forecasts show positive growth - The need to cut significantly the UK GDP of 1.3% in 2010 and 2.0% in budget deficit, strengthen the banking 2011, after a very large GDP decline sector, and reduce personal sector in of 4.9% in 2009. debt will inevitably limit UK growth in the next few years. - In the 2008-09 recession, UK GDP fell over six consecutive quarters - China & India have avoided (starting in Q2 2008 and ending in Q3 recession altogether and are growing 2009) and recorded cumulative at a faster pace than both the US and declines of 6.2%. Europe. -This is a much bigger cumulative - Manufacturing & services sectors are decline than in the recession of the likely to record positive annual early 1990s, when GDP recorded average growth in 2010 & 2011. But cumulative declines totalling 2.5%. construction is set to show a small average decline in 2010, before - After mid-2009, UK labour market modest growth in 2011. trends improved markedly. However, labour market trends have worsened - New forecast indicates that slightly since the beginning of 2010. manufacturing output, in annual average terms, will record positive - Inactivity is increasing at a rapid growth of 3.0% in 2010 and 2.0% in pace; full-time employment is falling; 2011, after declining by 10.5% in and private sector employment has 2009. declined by almost 1 million people between mid-08 and end-09. - New forecast envisages that total unemployment would rise from 2.51m UK GDP - positive growth of (8.0% of workforce) in Q1 2010, to a 1.3% for 2010 and 2% for 2011 peak of 2.65m (8.4% of workforce) in Q1 2011. - The aggressive deficit-reduction - The earnings growth for regular pay programme that the new coalition (excluding bonuses) was 1.9% for the government plans to implement may 3 months to March 2010, up from result large declines in public sector 1.7% for the 3 months to February employment. 2010. - If recent big inactivity increases are - Earnings figures show a persistent reversed, as discouraged workers sharp contrast between the public and return to the labour force, there is a private sectors, with pay in the public danger that unemployment would sector continuing to grow at a much increase. faster pace. - The Bank of England cannot ignore - Excluding bonuses, annual growth in the risk that inflationary expectations average earnings in January-March would worsen, and its own credibility 2010 was 1.2% in the private sector, would be questioned, if inflation stays and 4.0% in the public sector. for long above the 2% target. 7
  8. 8. - UK Bank Rate will stay at 0.5% until about November 2010; thereafter, we expect modest increases, to 1.00% before end-2010 and to 2.50% by the end of 2011. - In 2009 UK GDP fell 4.9%; against GDP declines of Germany (-5.0%), Japan (-5.0%), and Italy (-5.0%). But Britain’s 2009 growth performance was worse than that of the US (-2.4%) and France (-2.2%). - US growth remains consistently stronger than in both the UK and the Eurozone. - Since the business sector will drive any sustainable recovery, it is vital to avoid new business taxes, higher NICs, and measures that damage initiative, enterprise, and innovation. - Over the next 4-5 years, growth of annual UK GDP is likely to average just under 2%, considerably less than the 2.7% average growth between 03 and 07. Unemployment - New forecasts envisage that unemployment could rise from 2.51m could rise to a (8.0% of workforce) in Q1 2010, to a peak of 2.65m (8.4% of workforce) in peak of 2.65m Q1 2011. - Since the UK recession started in the in Q1 2011 spring of 2008, UK unemployment has risen by almost 900,000. 8
  9. 9. Regional metrics UK’s biggest increase in economically active people Unemployment up 16% on Q1 Employment up 2.75% 1,000 new apprentices taken on by NHS North West Increase of 43,000 economically active people Little improvement in unemployment levels Unemployment down nearly 19% on Q1 Unemployment up 17%...the highest in the UK Only 3.9% on jobseekers allowance Employment & unemployment levels remain static Ave. house price up 17% to £406,608 Highest Q2 house sales in the UK (31,000) North East - 6.7% of the population claiming Jobseekers allowance – Middlesbrough being the highest claimant area (7.7%), and Durham the lowest (2.5%) - 68% (1.16m) of the population in employment in Q2 - Employment levels up by 32,000 on Q1, and up 21,000 on a year ago - Average house price up 7% on a year ago to £143k – Northumberland saw the biggest increase (+11.1%) whilst Middlesbrough saw the biggest decrease (-10.5%) where the average price for a terraced house is £75k North West - 5.2% of the population claiming Jobseekers allowance – Liverpool being the highest claimant area (7.2%), and Eden the lowest (1.3%) - 71% (3.13m) of the population in employment in Q2 - Economically inactive rate up by 12,000 on Q1, but down 9,000 on a year ago - Average house price up 6.3% on a year ago to £153k – Halton saw the biggest increase (+17.5%) whilst Merseyside flat lined - Toyota say they want to shed up to 150 jobs from the company’s engine plant on Deeside - NHS North West has further invested in its workforce programme by introducing 1,000 new apprentices - Liverpool’s oldest department store, Lewis's...closed in June with the loss of more than 200 jobs. The store will be turned into a hotel and retail complex...Merepark, who saved the store from administration in 2007, said the redevelopment will create up to 1000 jobs in the area 9
  10. 10. Yorkshire & Humberside - 151,000 (5.7% of the population) claiming Jobseekers allowance – Kingston upon Hull being the highest claimant area (8.6%), and Richmondshire the lowest (1.8%) - 70% (2.4m) of the population in employment in Q2 - Employment levels up by 52,000 (1.1%) on Q1, and up 2.1% on a year ago - Average house price up 11.3% on a year ago to £158k – Kingston upon Hull saw the biggest increase (+14.8%) despite having an average price of sub-£100k East Midlands - 166,000 unemployed – an improvement of just 1.2% on Q1 2009 - 6.7% of the population of Leicester are claiming jobseekers allowance, compared to 1.6% in Rutland - 73% (2.11m) of the population in employment in Q2 - Employment levels dropped 42,000 (2%) on Q1, whilst economically inactive people increased by 65,000 (up 11.4%) - Average house price up 7.2% on a year ago to £160k – Leicestershire saw the biggest increase (+16.5%) whilst Nottingham saw prices fall by 3.6% West Midlands - 6% of the population claiming Jobseekers allowance – Wolverhampton being the highest claimant area (8%), and Stratford-upon-Avon the lowest (2.1%) - 70.6% (2.42m) of the population in employment in Q2 - Unemployment down 18.7% (43,000) on Q1, and 10% (23,000) on a year ago - Average house price up 10% on a year ago to £175k – Warwickshire saw the biggest increase (+19.4%) whilst Shropshire Unemployment in London saw minimal movement (+0.5%). House prices in Stratford-upon-Avon increased by was the UK’s biggest 28%. increase East - Only 3.9% of the population claiming Jobseekers allowance – Great Yarmouth being the highest claimant area (6.1%), and South Cambridgeshire the lowest (1.7%) - 75.7% (2.77m) of the population in employment in Q2 - Employment levels dropped by 33,000 (1.19%) on Q1, whilst economically inactive people increased by 5.8% - Average house price up 14.7% on a year ago to £203k – Suffolk saw the biggest increase (+18.9%) where the average price of a detached house is £298k South East - Highest total of economically inactive people in Q2 (73,000) – an increase of 7.6% - 3.2% of the population claiming Jobseekers allowance – Hastings being the highest claimant area (6.5%), and Hart & West Oxfordshire the lowest (1.6%) - 77% (4.15m) of the population in employment in Q2, whilst 6.4% were unemployed - Employment levels remained constant (-0.57%) but unemployment rose 2.57% - Average house price up 16.2% on 2009 to £272k – Portsmouth & Isle of Wight saw the biggest increase (24%) whilst Windsor & Maidenhead saw prices drop 8.8% 10
  11. 11. London - 4.5% of the population claiming Jobseekers allowance – Hackney being the highest claimant area (6.7%), and City of London the lowest (1.6%) - 69% (3.7m) of the population in employment in Q2, with 382,000 unemployed (9%) - Employment levels up by 28,000 (0.75%) on Q1, and up 30,000 on a year ago - Economically active population increased by 57,000 (1.4%) on Q1 and 1.2% on a year ago - However, unemployment in London was the UK’s biggest increase (+7.59%) - Average house price up a whopping16.6% on a year ago to £407k – Kensington & Chelsea (where the average house price is now almost £1.3m) saw the biggest increase (46.7%) whilst Barking & Dagenham was the only area to decrease (-0.3%) Jobs in the City increase 49% year on year The average salary Summary of key findings: in the City was £53k - 47% expect overall City hiring levels to increase, and 29% expect it to stay the same as H1 2010 in the second half of this year. - New job creation was cited by a third of managers to be the focus for hiring in H2. - 55% stated that finding good candidates with the right skills and experience was more difficult than a year ago. - 42% of managers felt that the structure of remuneration packages was the top priority. Competitors poaching staff was the next significant concern for 41% of managers and a shortage of talent was identified by 30% of managers. - 71% anticipate that the bonus element of compensation packages will remain the same and only 17% of managers expect a rise. - When asked about salaries, 48% of managers expected the average salary to stay the same in H2 2010 although 47% thought it would increase. - The average salary for those who secured new jobs in the City was £53,231, only a 4% decline from the average salary of those taking up new roles in May 10. City Jobs Market Highlights Hiring expectations in the London New job opportunities in the financial Financial Services sector - H2 2010 services sector fell by 2% from May 10 to June 10, however compared to the Dramatically increase same time last year, the number of Decrease Stay the 2% newly available jobs in the City 19% same increased by 49% in June 10 29% The number of new professionals Significantly increase entering the financial services jobs Dramatically 8% market rose by 3% month-on-month in decrease Significantly June 10, while there was a 60% 1% decrease increase compared to June 2009. 4% Increase Salaries 37% The average salary for those securing roles in June 10 was down 4% compared to May 10 but rose 6% on June 09 levels. When changing jobs, the average increase in basic pay received was 19% in Q2 2010 compared to 15% in Q1 2010 and 10% in Q2 2009. 11
  12. 12. City hiring market remains stable The financial services hiring market in London showed a slight 2% downward fluctuation in the number of newly available jobs, from 5,733 in May 10 to 5,645 in June 10. However compared to the same month last year, June 10 saw a 49% increase in new job opportunities from 3,780 in June 09. The number of professionals entering the jobs market remains at a similar level in June with a month-on-month 3% increase from 11,730 in May to 12,090 in June. This also represents a 60% increase in professionals newly active in the financial services jobs market in June 10 compared to June 09. Source: Morgan McKinley London Employment Monitor London 17th most expensive city in Europe London is the 17th most expensive city to live in Europe, according to the latest Cost of Living Surveyfrom Mercer. The survey, which covers 214 cities hires five continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment, shows after Moscow, Geneva, Zurich and Copenhagen, the most expensive cities in Europe are Oslo (11) in Norway, Milan (15), London and Paris (both 17) and Bern (22) in Switzerland. South West - 3.1% of the population claiming Jobseekers allowance – Torbay being the highest claimant area (4.4%), and Isles of Scilly the lowest (0.6%) - 75% (2.49m) of the population in employment in Q2 - Employment & unemployment both remained static at 4m and 272,000 respectively - Average house price up 13.5% on a year ago to £228k – Bath & NE Somerset saw the biggest increase (26.2%) whilst terraced property prices in Torbay fell by 3.2% Wales - Unemployment was up a staggering 17.6% to 131,000 – the same level as Q2 09 - 5.3% of the population claiming Jobseekers allowance – Blaenau Gwent being the highest claimant area (7.7%), and Ceredigion the lowest (1.9%) Welsh employment Rates Q2 2010 Neath Port Talbot Swansea Carmarthenshire Pembrokeshire South Wales Wales UK 58% 60% 62% 64% 66% 68% 70% 72% 74% - 68% (1.3m) of the population in employment in Q2 - Economically active people up 17,000 (1.2%) on Q1 but down (0.35%) on Q2 2009 - Average house price up 2.8% on a year ago to £152k – Powys saw the biggest increase (18.7%) whilst Carmarthenshire saw the biggest decrease (-10.3%) 12
  13. 13. Scotland - 4.9% of the population claiming Jobseekers allowance – North Ayrshire being the highest claimant area (6.7%), and Shetland & Orkney Islands the lowest (1.5%) - 72% (2.44m) of the population in employment in Q2…down 65,000 (-2.66%) on Q1, which was the biggest fall in the UK - Unemployment increased by 16.2% (35,000) on Q1 and 3.7% on a year ago - Against Q1, economically inactive people increased by 5.4% whilst economically active people dropped 1.13% (30,000) - Average house price up 5.4% on a year ago to £148k – Inverclyde saw the biggest increase (26.4%) whilst Moray saw the biggest decrease (-5%) Scottish private sector recovery slows Scottish private sector recovery slowed in June, according to the Bank of Scotland’s purchasing managers’ index (PMI). The seasonally adjusted index, which monitors activity across Scotland’s Recovery in the Scottish manufacturing and service sectors, fell from 53.1 to 52.9. The index also shows that economy is underway new order and employment growth both decelerated since May. Donald MacRae, chief economist at Bank of Scotland, says: “The recovery in the Scottish economy slowed in June. However, overall growth was achieved by a best- ever rise in manufacturing output augmenting only marginal growth in the service sector. While the pace of input cost inflation faced by businesses moderated, average costs again inflated at a much stronger pace than the UK. Recovery in the Scottish economy is underway albeit at a slower rate than the UK as a whole.” Scottish business activity continues its climb Overall activity across the Scottish private sector economy increased for the twelfth month in succession during June. Survey respondents linked the latest rise to new order growth. However, the pace of expansion as signalled by the seasonally adjusted Business Activity Index was mild and weaker than recorded for the UK as a whole. The divergence between the performance of manufacturers and service providers was stark. Scottish service providers registered only a fractional increase in output during June, while goods producers posted the strongest monthly rise in the history of the series. Businesses cautious over new projects Mirroring the trend recorded for activity, new orders also rose at a weaker pace during June. Although mild, and weaker than seen at the UK-wide level, the rise was the fifth in successive months. Higher demand for goods and services was widely commented on. However, a number of firms indicated that renewed concerns regarding the sustainability of the recovery had led clients to postpone new projects. This view was particularly apparent in the service sector, where new business levels fell on average in June. 13
  14. 14. Northern Ireland - 6.3% of the population claiming Economically (in)active rates in Northern Ireland Jobseekers allowance – Derry being the highest claimant area (7.4%), and Castlereagh the lowest (3.1%) - 68% (776,000) of the population in employment in Q2 - Employment levels up by 29,000 on Q1 (3.74%), and up 2,000 on a year ago - Highest increase of economically active people over the quarter (4.55%), whilst economically inactive people fell by a huge 11.4% - Average house price down 16.8% on a year ago to £169k – Source: ONS Hartlepool seeing the biggest increase (25%) and Londonderry seeing the biggest drop of -34% London accounted for 25% of all internet job searches, followed by Bristol (6%), Manchester (5%) and Birmingham & Leeds (4%) 14
  15. 15. Economically inactive Unemployment Employment Economically active Change v Change v Change v Change v Change v Change v Change v Change v Q2 2010 Q2 2010 Q2 2010 Q2 2010 Q1 2010 Q2 2009 Q1 2010 Q2 2009 Q1 2010 Q2 2009 Q1 2010 Q2 2009 North East 354 -35 -26 121 7 1 1,163 32 21 1,284 39 21 North West 944 12 -9 284 2 -5 3,133 1 17 3,417 4 12 Yorkshire 674 -10 -41 245 17 -8 2,434 27 52 2,678 43 44 East Midlands 568 65 16 165 -3 -15 2,117 -42 5 2,282 -45 -10 West Midlands 714 0 -8 230 -43 -23 2,451 46 31 2,680 2 8 East 654 38 14 196 8 -2 2,773 -33 -6 2,969 -25 -7 1,235 4 -36 382 29 18 3,737 28 30 4,118 57 49 Figures are in thousands and are seasonally adjusted London South East 958 73 46 272 7 -12 4,139 -21 -12 4,411 -14 -24 Table 1 - Labour Market Statistics South West 595 38 -22 168 2 -2 2,505 0 34 2,672 2 32 England 6,696 184 -66 2,061 26 -48 24,451 37 172 26,512 63 124 Wales 427 -9 9 131 23 0 1,314 -6 -6 1,445 17 -5 Scotland 685 37 5 216 35 8 2,443 -65 -9 2,660 -30 0 Great Britain 7,807 213 -52 2,409 84 -39 28,208 -34 158 30,617 50 118 Northern Ireland 290 -33 -9 59 8 6 776 29 2 835 38 8 United Kingdom 8,097 180 -62 2,468 92 -34 28,984 -5 160 31,452 88 126 15
  16. 16. Market indicators Number of people (000's) Rates (%) UK labour force survey Change v Change v Q2 Q2 indicators Q1 2010 Q1 2010 Number in employment & rate 28,984 160 72.3 0.3 Unemployment (aged 16+) 2,468 -34 7.8 -0.1 Inactivity (working age) 8,097 -62 21.3 -0.2 Average weekly earnings Q2 average weekly pay Annual growth since Q2 2009 Total pay (inc. bonuses) 453 2.7 Regular pay (exc. Bonuses) 428 1.8 Employment continues steady rise The number of staff appointments grew in June, according to a survey by the Recruitment and Employment Confederation (Rec). It reported a further strong rise in permanent staff placements, with engineering and construction the most sought after. However, the pace of growth was the slowest for five months. Rec said more people were available for permanent and temporary work in June compared with previous months. Rec's chief executive, Kevin Green, said: "This is an encouraging sign that the jobs market is stable and, …some sectors such in some sectors such as construction and engineering, rapidly growing. as construction and engineering, are rapidly "However, with the predictions of up to 600,000 job losses in the public sector, it is still too early to tell growing how much of a knock-on effect this will have on job creation in the private sector." Brakes applied to public sector hiring Recruiting great staff while staying within company budgets is set to remain a challenge for employers this year, according to new research by the Chartered Institute of Personnel and Development (CIPD) found. Two thirds of organisations have experienced hiring difficulties, despite the reduction in recruitment activity during 2009 and the burgeoning labour market. Some 80% of those surveyed listed attracting and recruiting key staff as their top objective. Half the public sector organisations surveyed said they planned to implement a recruitment freeze, compared with just 16% of private sector firms, while nearly 70% plan to reduce their number of new recruits, compared with 32% in the private sector. The increased pressure on budgets has led more organisations to focus on in-house talent, with over half of them using methods to retain rather than recruit new staff. 16
  17. 17. Unemployment figures on the slide Unemployment in the UK now stands at 2.47 million, following a fall of 49,000 in Q2. Meanwhile, the number of people claiming Jobseeker's Allowance fell in June by 3,800 to 1.46 million, the Office for National Statistics (ONS) said. The latest figures also showed that the number of economically inactive people - those out of work and not seeking employment - fell by 0.2% to 8.1 million. UK unemployment 1992 - 2010 Source: BBC Business The UK long-term unemployment rate is currently lower than in the mid-1980s and early 1990s although it has continued to rise in recent months. The lower level of long-term unemployment indicates that any hysteresis-type effect may be smaller than suggested by previous experiences. But there remains considerable uncertainty about how the labour market will evolve and, given the rise in the unemployment rate to 8%, there remains a risk that long- term unemployment might rise further. Unemployment rate by duration Source: Bank of England 17
  18. 18. UK jobs market recovery set to stall Recovery in the jobs market will "stall" this year as demand for workers in the public sector falls, new research has warned. According to the Chartered Institute of Personnel and Development (CIPD), a third of employers expect to cut jobs in the next three months. Across all sectors employers are expecting to make an average of 5.5% of their workforces redundant, the survey of 600 companies suggests, up from the 3.6% average cut being considered three months ago. Despite the threat of cuts, the CIPD's net employment index, which measures the number of companies planning to hire against the number planning to lose staff, is still in positive territory at +2, down from +5 three months ago. But the difference between the public and private sectors is stark. For the private sector alone, the index shows strong hiring intentions at +19 while in the public sector, the index gives a reading of -35. Jobless rise predicted "The employment situation looks like a case of the good, the bad and the ugly," said Gerwyn Davies, CIPD public policy adviser and report author. "While the number of employers planning to make redundancies is similar to that in the spring, this trend masks the true extent of forthcoming job losses in the third quarter of the year. The big question is whether the private sector can create new jobs in sufficient numbers and quickly enough.” "The CIPD believes that a rise in unemployment in the next two years remains a distinct possibility as the private sector recovery is offset by the 600,000 public sector job losses the government expects over the next five years." In October the scale of cuts to government departmental budgets will become clear when the A rise in government announces the results of its spending review. Cuts of 25% are anticipated for most unemployment in the departments. next two years remains According to the CIPD's survey, job losses are most a distinct possibility likely in local government. 18
  19. 19. The IT market Confidence continues to sustain the Demand surges for IT staff in 2010 market Despite a 21% drop in public sector job postings in the last quarter, and reveal that overall the IT jobs market for permanent staff has increased at its fastest rate for over three years. For the fourth consecutive quarter there has been an increase in the number of jobs advertised, with 8% more since March 2010. Since the government braced the nation for a high number of public sector job cuts, 21% fewer public sector jobs have been advertised and public sector job posts have dropped from fourth to fifth place in sector rankings. However, contract work in the public sector remains relatively buoyant. Permanent job postings for the financial and media sectors continue to grow, with an 8% and 12% increase respectively. Richard Nott, website director of CWJobs, says: “We were all aware that the IT sector would be affected by public sector cutbacks, but it’s encouraging to see that overall job postings are continuing to increase. “With contract work still available at the moment, there are opportunities in the public sector for those willing and able to be flexible.” Dave Pye, executive committee member of the REC technology sector group, suggested that the figures are very encouraging and show that industries are keen to push on with growth projects delayed during the recession. "A lot of the growth we have seen has been for business technology skills, rather than just Just 3% of UK businesses plan pure-play technology skills, for areas like to replace IT staff to fill the financial services or pharmaceuticals, skills gap left by the recession underlining demand for people that can get things done," he said. "The demand we have seen will ease off somewhat, but we still expect growth for the next few months as confidence continues to sustain the market and help companies grow." "It's a case of wait and see in the public sector at the moment as to how cuts will affect IT workers. But certainly there will be projects that need completing, so work could remain if only on a contractor basis rather than full time," he said. 19
  20. 20. Cloud computing skills will make you more employable Four in 10 IT professionals predict that increasing use of cloud computing will create more jobs, according to IT jobs specialist The research shows that 70% believe cloud computing skills and experience will make them more employable. Only 28% believe cloud computing will mean less jobs. Q2 saw an 8.1% increase in IT jobs advertised but IT recruitment remains 170% down on 2008 levels. Richard Nott, website director of CWJobs, says: “While it is not yet clear which specific skills will be useful for cloud computing, the majority of IT professionals do believe there will be a need to adapt to capitalise on the changing IT landscape and that now is the time to do this.” Cap on foreign workers “unresponsive to the market” The proposed cap on non-EU workers announced by the Coalition Government is unlikely to significantly cut numbers of foreign IT workers coming to the UK, according to the Association of Professional Staffing Companies (APSCo). APSCO says this is due to the cap excluding intra-company transfers, a type of work permit which allows employers to bring workers to the UK from overseas offices. Ann Swain, chief executive of APSCo, says: “More than 80% of non-EU IT workers coming to the UK on work permits are intra-company 64% of businesses admitted transfers, so if the government doesn’t look at this they will be investing in IT to issue, the cap will be little more than an empty help drive business forward gesture. “We would prefer tightening up the intra-company transfer rules rather than an outright cap. A cap would be unwieldy and unresponsive to the market. What if an employer cannot fill an urgent, niche requirement but the cap on intra-company transfers has already been reached? “The new rules will stop small UK-owned IT businesses from plugging skills gaps, but won’t stop IT giants with global office networks from bringing staff to the UK on an industrial scale.” 20
  21. 21. Government to dismantle IR35 The Government said that it is going to simplify and streamline the tax system to encourage foreign investment. To this end they have set up The Office for Tax Simplification which will look at tax relief, allowances, exemptions etc. The Coalition had previously said that they would scrap IR35 in a review of business taxation so this must be part of what is coming. Mr Gauke, the Exchequer secretary, said "The tax system created by the previous government was overly complex and has made the tax affairs of millions of families and businesses across the UK extremely complicated. We need to reduce the complexities in our tax system and the coalition is committed to delivering that goal.” At the moment freelancers and contractors receive a number of tax reliefs (for instance on travel expenses and subsistence) to reflect the risks of the flexible workforce. Any moves by the Government, which spends £16bn on IT projects each year, to undermine the flexible workforce market, which UK plc is relying on more and more in these difficult times, will backfire on the UK economy. Stuart Davis, Chairman of the FCSA, commented, “The FCSA hopes that the OTS is not just government window dressing or an excuse to remove important tax reliefs, but is independent of Treasury and will have real teeth in simplifying tax for the different labour markets in the UK.” The government spends £16bn on IT projects each year 21
  22. 22. KEY MARKET INDICATORS QUARTER TWO 2010 - Demand for permanent IT jobs up by 8.1% - Contract vacancies up 11% - Vacancies in finance up 7.9% - Developers pay increases by 3.3% As reported on page 19, the IT jobs market for perm staff increased at its fastest rate for more than three years with 8.1% more jobs advertised. The findings are in line with other economic indicators showing an improvement in the economy and coincide with the UK coming out of recession during the latter part of 2009. However, when compared with the start of the financial crisis, IT recruitment is still down by 170% and is at a level not seen since January 2004. Top 10 IT contract skills in demand % change Vacancies Skill Daily rate on Q2 2009 (3m) SQL £425 +13% 9,600 Oracle £425 +6% 7,209 Java £500 +14% 7,079 .Net £400 +14% 6,276 Developers made SQL Server £375 +14% 5,823 up 41% of all jobs C# £475 +6% 5,793 UNIX £450 +17% 4,905 advertised XML £425 +29% 3,727 SAP £445 +5% 3,686 MS Excel £375 +21% 3,319 The dominant job function being sought is software developer. This quarter developers (all grades) made up over 41% of all IT jobs advertised. It is here that the main impact of the increase in demand is being seen with advertising up by 8.3% quarter on quarter. From the start of the year demand for developer-type roles has gone up by 15.1%. Elsewhere, prospects are equally as good with virtually all vacancies such as support, administration and networking increasing in volumes. However, demand for senior management is down by 1.4%, but this does not include project manager roles, for which job offers are up by 4.6%. Top 10 IT permanent skills in demand % change Vacancies Skill Salary on Q2 2009 (3m) SQL £40,000 +7% 22,638 .Net £40,000 +14% 19,643 C# £41,500 +11% 17,886 Java £50,000 +16% 17,489 Job offers for SQL Server Oracle £38,000 £47,500 +9% +8% 17,327 12,757 Project Manager’s UNIX £50,000 +11% 10,687 up by 4.6% Linux £44,000 +10% 10,234 XML £40,000 14% 9,860 £37,500 +7% 9,840 22
  23. 23. In the first quarter of 2010, contract recruitment increased by 10.1%, during the second quarter 2010 the increase is 11.2%, suggesting recovery is well under way. Permanent salaries reflected the state of current employment levels with average pay increasing by just 1.1% compared with a year ago. This is somewhat higher than the 0.7% recorded in the Q1 2010. Top 10 IT contract job titles in demand % change Vacancies Job Title Daily rate on Q2 2009 (3m) Developer £425 +13% 15,085 Analyst £425 +13% 14,121 Business Analyst £475 +12% 7,108 Project Manager £450 +12% 5,148 Perm salaries Consultant £425 +6% 4,373 increased by 1.1% Architect £475 - 2,665 Test Analyst £320 +7% 1,365 on a year ago Support Analyst £375 +11% 1,331 Designer £360 +20% 1,137 DBA £350 +3% 937 These general figures tend to hide the wide variations seen in salaries dependent on the job function, region, business sector and software skills. Nationally developers have seen pay offers up by 3.3% over the past year. Average increases for networking staff are up by 2.8%, but pay for support roles such as system administration and PC support remain stagnant with little movement from last year. Contract rates started to improve in the first quarter and have continued to improve in the second quarter with average rates up by 3.2% compared with twelve months ago. Top 10 IT permanent job titles in demand % change on Vacancies Job Title Salary Q2 2009 (3m) Developer £40,000 +14% 31,458 Analyst £40,000 +11% 17,179 Consultant £52,500 +5% 9,510 Business Analyst £50,000 +11% 6,238 Contract rates Architect £66,000 +6% 5,678 continued to Project Manager £52,500 +5% 5,651 Web Developer £32,500 +8% 3,627 improve in Q2 Support Analyst £32,500 +5% 3,216 Software Engineer £38,000 +1% 2,795 Administrator £36,000 +3% 2,514 23
  24. 24. Contract rates in retail and telecoms took a dive in Q2; -2% and -4% respectively. Despite this they were both in the top four industry sectors in terms of jobs advertised. Typically, finance dominated the contract vacancies, accounting for a quarter of all adverts placed. In the same vein, investment banking commands the highest average rate of £538/day – an 8% increase on a year ago. Law and legal vacancies saw the highest year-on-year change…jumping 23% on Q3 2009. Outside of the top 10, rates in the pharmaceutical industry increased 23% on a year ago to an average of £400/day, whilst contracts in the electrical industry bombed 27% to an average of just £275/day. Top 10 industry sectors (contract) % change Vacancies Sector Daily rate on Q3 2009 (3m) Finance £450 +6% 14,882 Investment Banking £538 +8% 6,912 Retail £394 -2% 2,654 Telecoms £325 -4% 1,954 £538 – average Insurance £425 +13% 1,842 daily rate in Government £375 +3% 1,482 Marketing £350 +13% 1,113 investment banking Healthcare £350 +8% 814 Legal £475 +23% 736 Education £350 - 727 Over 26,000 adverts for perm positions were placed in the financial sector during quarter two, commanding an average salary of £52k. Telecoms saw the biggest year-on-year salary increase (14%), whilst investment banking jobs typically command around the £70k mark. Further down the pecking order, the biggest climbers were retail banking, social media and legal. Conversely the sectors on the slide include aerospace, military and police vacancies. Top 10 industry sectors (perm) % change Vacancies Sector Salary on Q3 2009 (3m) Finance £52,500 +5% 26,283 Pensions £65,000 +4% 12,498 Investment Banking £70,000 +4% 5,551 Marketing £37,500 +7% 5,292 Telecoms salaries Healthcare £40,250 +1% 5,098 Retail £50,000 +11% 4,659 increase 14% on Insurance £45,000 +6% 4,541 Q3 2009 Telecoms £45,500 +14% 3,832 Education £42,500 +13% 3,349 Government £50,000 +13% 2,256 Sources: & 24
  25. 25. IT market news - IT contract hires increased 45% in the investment banking sector, according to the latest research by a pre-employment screening firm. - Total industry employment offers rose 52% in July compared to a year ago, but offers declined 2% across quarter two. - A new joint manifesto has been put out by Britain’s top technology companies (Logica, Cisco, HP and IBM to new a few) co-ordinated by e-skills which predicts that 110,000 new technology people will be needed for the technology sector over the next decade. They said that even during the downturn the number of technology jobs has risen even as unemployment soared. - Transport for London (TfL) has said it is “aware of some problems” with its congestion charge payments technology, provided by IBM, according to public sector ICT analyst Kable. The system is supposed to allow fleets, lease companies and vehicle rental suppliers to receive a £1 discount on the £8 congestion charge if they register their vehicles online. - Defence company BAE Systems has seen a 20% reduction in total cost of ownership of IT assets, and a 90% reduction in its provisioning cycle as a result of setting up a private cloud, according to its chief IT strategist. - In 2010, Standard Life will be spending more than £200m to market its retail proposition - with IT representing a "good lot of it", according to Christian Torkington (Technology Chief), who has been developing a comprehensive blueprint across his areas of responsibility to drive a customer-centric approach and respond to changing business needs. One of Torkington's first actions from an IT standpoint was to assess the firm's technology capability and hiring Mark Dixon, a former IBM executive, as the firm's first ever chief technology officer was an important part of the plan. No redundancies have been made as a result of the new strategy, says Torkington, adding that there is "a lot of work to be done" and significant hiring activity has taken place both on the permanent and contract fronts. - David Bickerton has been appointed global chief information officer (CIO) at Centrica. Most recently CIO at Centrica subsidiary British Gas, Bickerton will be responsible for developing and delivering an integrated IT strategy across the group. "I am very much looking forward to the challenge of identifying appropriate integration opportunities while supporting the individual businesses, and we have a strong team who will continue to work hard to improve and develop our businesses," Bickerton said. 25
  26. 26. - Small businesses are spending more on IT, but nearly half of firms surveyed see IT as a Gartner’s freelance role rather than an in-house function. 2010 Skills most in demand among SMEs: 1. PHP 2. SEO/link building predictions 3. Wordpress 4. Joomla By 2012, 20% of businesses will 5. iPhone Apps own no IT assets. 6. MySQL 7. HTML 8. Flash game development By 2012, India-centric IT service 9. .Net companies will represent 20% of 10. ASP.Net the leading cloud aggregators in the market. - Microsoft has struck new partnerships that will see its Windows Azure cloud platform By 2012, Facebook will become appear as a private cloud offering. the hub for social networks integration and Web The Azure cloud platform - which provides socialization. scalable computing power and storage, as well as a number of other online services hosted on Microsoft datacentres - is By 2014, most IT business cases Microsoft's most high-profile cloud push to will include carbon remediation date. costs. - Demand for IT workers in permanent In 2012, 60% of a new PC’s total positions has risen by almost 20 per cent in life greenhouse gas emissions the past year, as recession worries recede will have occurred before the and confidence in investing in IT rises. user first turns the machine on. The Report on Jobs from the Recruitment and Internet marketing will be Employment Confederation (REC) and KPMG regulated by 2015, controlling showed that the percentage of IT staff employed on a permanent basis had risen by more than $250 billion in Internet 17.8 points to 61.4, up from 43.6 in 2009. marketing spending worldwide. The figures also rose significantly for By 2014, more than three billion temporary positions, up from 43.3 to 56.9 of the world’s adult population over the same period. will be able to transact electronically via mobile and The points are calculated from the Internet technology. percentages of respondents reporting an improvement, no change or a decline. The By 2015, context will be as indices vary between 0 and 100, and a influential to mobile consumer reading of exactly 50 signals no change on the previous month. services and relationships as search engines are to the Web. By 2013, mobile phones will overtake PCs as the most common Web access device worldwide. 26
  27. 27. Oracle has - Security software spending will reach a worldwide total of £10.6bn this year as the finally closed industry pulls further clear of recession, according to a new report from Gartner. the The figure represents growth of about 11% against the same time last year, when OpenSolaris spending on security software added up to just under £9.6bn. Gartner said in its latest development Forecast Analysis that in most cases the economic slowdown had caused a fall in project investment, but that enterprises are keen to keep security technology current and will invest as a result. - The Environment Agency will use Cap Gemini’s soon-to-be-launched Merlin datacentre, which the outsourcing provider claims is the world’s most energy efficient and sustainable. A spokesman from the government department confirmed that it will begin using the datacentre in September. Cap Gemini claims its 30,000 square foot facility will set a new standard for energy efficiency - Oracle has finally closed the OpenSolaris development project in a move that has angered the open source community. OpenSolaris software engineer Steve Stallion posted on his blog the lengthy email detailing the closure which was sent internally to all engineers working on the project. In essence, Oracle has decided to release open source versions of Solaris only after the commercial one ships. - Transport for London (TfL) is looking for a technology provider to supply speed cameras for a project that it intends to trial. The government department said that the cameras will be used to "enforce average speed limits in urban areas", according to GC News. - Governments need to take advantage of new technologies to enhance cost-cutting initiatives without reducing their effectiveness, according to a new report from Gartner. The analyst firm's From Modernization to Survival report argues that, while budgets are being reduced, the benefits of technology to further reduce spending are not being explored. Services such as public clouds, community source projects, crowd sourcing and teleworking should all be used to help bring about further cost savings, according to Gartner, but there are security issues to be overcome first. 27