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The Chancellor’s budget unveiled a three-step plan which intends to “protect jobs and livelihoods” as the pandemic continues. The easing of restrictions is reflected in the financial measures put into place, but with unemployment being at its highest level in the last five years, we examine whether it is an employer’s market.

We outline the current outlook on recruitment and retention trends over 2021 and examine whether employers really have their choice of candidates right now.

Recruitment outlook

During Lockdown 3.0, in spite of ongoing restrictions, more than half of UK employers revealed plans to hire new staff. This in part may have reflected the faith placed in the vaccine for seeing a return to a ‘new normal’ over the course of this year. The survey carried out by the Chartered Institute of Personnel and Development (CIPD) in partnership with recruitment firm Adecco welcomed the findings, which revealed that healthcare, finance, insurance, education and ICT are the sectors planning the highest recruitment activity. This will be buoyed by the budget which provides crucial financial assistance to businesses currently in survival mode. A new UK-wide Recovery Loan Scheme offers businesses of all sizes up to £10m to help them get through the next stage of recovery.

Unemployment rate

With 1.72 million people unemployed between September and November, many would assume that it is an employer’s market right now. Companies planned a record number of redundancies last year – 800,000 according to a BBC Freedom of Information request to the Insolvency Service. As many seek employment during the pandemic, employers would surely expect an influx of candidates to choose from. However, the correlation is not quite that straightforward.

The right skills

Whilst flexible working may enable employers to access a wider talent pool, employers have spoken about how they have struggled to recruit the right talent in our HR Groups. This particularly surfaced in the Healthcare sector, which may be exacerbated further by the one per cent pay rise for NHS workers recommended by the Department of Health and Social Care. The proposed pay deal for NHS workers is criticised as ‘bitterly disappointing’ and the ‘worst kind of insult’ by the Unions. There is a delicate balance to be struck between an ‘affordable’ and fair pay award – the Secretary of State spent the weekend justifying the proposed increase whilst Unions are preparing to resist the proposal with potential strike action.

Demographic impact

Meanwhile from an employee perspective, many young people have been adversely affected at the outset of their career. Many have borne the brunt of job losses and 58 per cent of young people experienced a fall in their earnings compared to the national average of 42 per cent. People have been affected who would have gained valuable experience from working part time around studying. Experience is playing a key role in how successful new graduates are in securing roles and with reports of fewer opportunities because of the pandemic, this can become a vicious cycle when you are in the early stages of your career.

The long-term generational impact remains to be seen. In addition, 47 per cent of young people are furloughed; what happens when furlough ends? There needs to be an emphasis on greater mental health support and a ‘wellbeing recovery’ for all after Lockdown 3.0. Mental health charity Mind offers some excellent resources for people struggling with ongoing restrictions.

Different boats, same storm

The pandemic has undoubtedly impacted people to varying degrees. Over two thirds of workers in the UK have become unwitting savers in this period and may have the financial freedom to move if they are unsatisfied with the approach taken by their employers over this period. In our spring 2020 UK Reward Management Survey, the vast majority of employers felt that the actions of employers during the pandemic would define them in years to come. Four in every five employers believed employees were satisfied with their response to Covid-19 at the outset of the pandemic; what may be more crucial now is how the return to work is handled.


Research by the CIPD and Adecco captured a reduction in the number of firms planning to make redundancies in the first quarter of 2021 from 30 to 20 per cent compared to autumn 2020. With the budget announcing the extension of the furlough scheme, which has already saved more than 11 million jobs since it commenced last March, employers will welcome the extension of the scheme that pays 80 per cent of employees’ wages for the hours they cannot work in the pandemic. The Coronavirus Job Retention Scheme has been extended until September – beyond all restrictions being set to be lifted around 21 June. This ensures that financial support doesn’t fall off a cliff edge after a sustained period of economic inactivity for some businesses, especially hospitality. Employers will pay 10 per cent towards the hours their staff do not work in July, which increases to 20 per cent in August and September. This is designed to support the loosening of restrictions over this period; mirroring the anticipated recovery as the economy reopens.

Security vs Freedom

After such a turbulent period, it is understandable that employees would not want to move from the current security afforded by their roles. However, we have heard anecdotes that how the return to the office was handled in autumn 2020 prompted some employees to leave their organisations.

“After such a turbulent period, it is understandable that employees would not want to move from the current security afforded by their roles.”

Whilst some employers are taking a stronger stance in relation to staff coming into the office, it is important to both set expectations for the long-term and help manage the return process in partnership with employees. Many organisations supported their employees during the last return to the office over the summer and into September by providing health and safety videos to get employees comfortable with the notion of how the office had changed, stepping up pulse surveys to capture employee reactions and increasing employee communications to signal support.

The road to recovery

The redundancy rates during the pandemic have increased faster than the economic crisis of 2008. Administrative and support services had the official highest redundancy rates, and Associations and Institutes and Construction reported high levels of redundancies over the summer. Hopefully we have seen the height of those being furloughed and those being made redundant during the pandemic and we are approaching a period of recruitment and renewed economic activity. The vaccination rollout has been widely hailed as successful – we hope the current plateau in redundancies can now be sustained as the economy reopens. The Office for Budget Responsibility (OBR) has forecast a “swifter and more sustainable recovery” than previously expected in November 2020. The economy is predicted to return to its pre-Covid levels by the middle of 2022, six months earlier than previously thought. Later in the year the focus may shift for employees – with more financial stability, the labour market may see greater buoyancy.

Get in touch

So, is it currently an employer’s market? This depends on the sector you operate in, the skills you’re seeking and how strong your employer brand is, in order to attract the right candidates and keep the talent you have.

With the vaccination programme well underway and the road to recovery laid out, people can start to see a way out of a difficult year. We anticipate that the labour market will be buoyant if the recovery roadmap comes to fruition. But employers need to be wary of their approach – and look at their past, their present and their future actions.

As we start to come through this, people who have been unhappy with employers over last year are likely to feel the impact and make a choice. Equally, those employers who have built a culture that has thrived on open communication and driven employee engagement throughout this period will reap rewards in the candidates they attract. Call us today if we can help you support your people strategy and define your approach post-pandemic.


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