Is The Capital Stealing Talent from The North?
A turbulent 20 months has been an extremely challenging time for businesses and jobseekers alike.
The UK job market has suffered on a huge scale, and the tech sector has not avoided the damage brought on by the pandemic. Last spring saw more than half of UK tech companies either holding back on hiring or putting the brakes on recruitment altogether. Advertised tech roles is 42% higher than in 2019, with cities including Preston, Cardiff and Edinburgh seeing some of the biggest increases in vacancies.
The post-pandemic attrition
If it wasn’t difficult enough already for businesses to navigate through the attrition jungle, the pandemic also meant furlough rates increased, resulting in some seeking employment elsewhere, or businesses were forced to make redundancies, only to want to rehire once in a better position, coupled with an increasing lack of skilled people available.
The UK is seeing more interest from international investors than ever with 63% of investment into UK tech coming from overseas in 2020, up from 50% in 2016. London is fourth for tech VC investment globally behind San Francisco, Beijing and New York at $10.6bn, with the biggest UK impact start-ups in 2020 being based in Hull. Abingdon, Cambridge and Leeds.
Pre-pandemic, it was more common for recruiters to poach staff who were tied into a particular region. But now, thanks to the rise in remote working, the recruitment market has gone from regional to global. You’ve also got a huge war on talent around what businesses are offering regarding flexible work packages, with businesses now competing with everyone in the country. It’s an interesting dynamic - almost like a double-edged sword. It’s opened a lot of opportunity, but it’s also made it even more difficult to hire when bound to regional boundaries.
Engineers now have more opportunity to get a new job in the south with a higher salary, but then continue to live in the north. It used to be a case that people relocated to London– now the job is coming to them.
A recent survey found 61% of organisations in the Southeast and London say their location is advantageous to their digital transformation ambitions compared to just 41% in the rest of England.
So, you have the skilled staff, but how do you retain those that have been introduced to a world where remote and hybrid working is more accessible than ever? Businesses have been forced to change their mind set. Before, the attitude was “out of sight doesn’t work for us” – all of them reservations have had to go in order to adapt by introducing a remote or hybrid policy to their workplace.
Northern businesses are having to increase salaries by 20-30% to retain their staff who might leave for a higher salary or attract skilled developers who could would naturally gravitate towards the south, but that isn’t a long-term solution. This challenge isn’t going away, and the attrition rate is higher.
One way or another, there’s always been a UK tech skills gap, but it’s getting wider, year on year. Coupled with the growing recruitment challenge, the word to best describe it would be supply shock. Going forward, businesses will have to scope their recruitment differently. With a recent report claiming 69% of employers in the UK are facing a digital skills gap and universities believing they alone can’t address this issue; the question is how the post-pandemic attrition can be tackled in a way that provides long term benefits for a business?