Insights

The Hiring Trends Index from TotalJobs aids employers by giving them a glimpse of the latest data regarding the UK labour market. We’re going to delve into the second quarter of 2023 to see how businesses are using AI to recruit new talent, and how it is having an impact on the workplace. The Hiring Trends Index utilises insights from over 1,005 HR professionals, with the latest instalment having a prime focus on AI and its influence on the workplace.

Key Findings

• The Bank of England have Raised their Interest Rates to a 16-Year High
• Workers are Demanding Higher Wages to Accommodate Inflation
• The Number of Payroll Employees in the UK has Surpassed 30 Million
• Unemployment Levels have Increased to 4%
• 81% of Businesses Recruited in Q2 2023

Interest rates in the UK have now hit a 16-year high. They currently stand at around 5%. Economists expected the rate to drop from 8.7% down to 8.2% in Q2. Surprisingly, they plummeted to 7.9%. The Bank of England have reviewed the current forecast and predict that now, by Q1 2024, the inflation rate is going to stand at 5%. This is much higher than their prediction earlier in the year. On a positive note, the UK labour market has been experiencing a period of rapid growth. More people than ever are joining and the number of UK payroll employees has reached 30 million. With that in mind, the loosening of the labour market has brought about some consequences. Employment and unemployment levels increased to 76% and 4%.

Ongoing Economic Pressure

The working market is currently experiencing ongoing economical pressure. Workers are demanding higher wages to keep up with the current rate of inflation. The growth of regular pay has reached 7.3%, which is the highest outside of the pandemic. Some companies have started to utilise automation and AI, in an attempt to supplement their workforce.

81% of companies recruited in Q2 2023, which is more than Q1 2023. Vacancies have been dropping, but they are still above 1 million. This is 25% higher than pre-pandemic levels. The average hiring time decreased as well. It was 6.4 weeks in Q1 and 5.8 weeks in Q2.

40% of businesses have reported that they are now using AI in the recruitment process to screen candidates, schedule interviews, create job advertisements and also create interview questions.

A Look at the Last Three Months

Some key takeaways for the last three months include the fact that 81% of businesses recruited in Q2 of 2023. 1 out of 3 of those people, increased the number of employees working at the company. Employers are not likely to stop hiring altogether due to labour shortages. Vacancies now come in at 1,051,000 which is 25% lower than April of 2022. It’s still above pre-pandemic levels. Students have been joining the workforce, as are early retirees in an attempt to cope with the rising cost of living. This decreases the total of people who are economically inactive. Even though more people have been flooding to the workforce, the UK market is still somewhat tight. Those reporting long-term sickness has reached a new record, coming in at 2.55 million.

2023 Q3 Recruitment

Business confidence has also experienced a bit of an uptick at the start of the year. The majority of employers, or 57% of them have said that they feel confident in being able to recruit the people they need. 26% of companies plan to increase recruitment in 2023 with the top sectors being transportation, hospitality and leisure, and finally, medical health services.

Moving on to the second quarter of 2023, it is evident that wage growth has picked up once more. It has now reached a historic high of 7.2%. This is due to the increase in the national living wage, which stands at £10.42 for those who are over the age of 23. Economists are expecting a wage-price spiral, meaning wage growth could in-turn, fuel inflation and so forth. The current demand for higher wages is not likely to slow down the price increases regarding basic needs. This includes housing, food and energy. 4 out of 10 adults in the UK are finding it difficult to afford mortgage payments and rent, which has shot up by 25% since last month.

Labour shortages within the UK are also a contributing factor, giving workers a strong position for negotiation. For UK businesses to keep on growing and for them to stay on the current positive trend, they have to streamline their efforts in regards to retention. 16% of companies are now investing in technology, as well as automation in an attempt to supplement their workforce. As technology advances, it wouldn’t be a surprise to see companies lean on AI to cover basic tasks, while increasing productivity.

Integrating AI Into the Workplace

Currently, 53% of businesses use AI within the workplace, to some degree. 39% of small companies use AI tools in comparison to 50% of medium companies and 79% of large companies. The most popular use of AI would be in tech and IT, followed by operations and finally, PR and marketing. 1 in 5 companies say that they strongly anticipate they are going to use AI within their day-to-day operations before the end of the year.

So, that brings about the question. What do employees think abot using AI? This has been explored before, with the findings indicating that 2 out of 5 workers don’t think that they have the right skills to make the most out of the AI tools within their workplace.

Younger generations and office workers are generally more excited about the future and the innovations AI will bring to their industry.

While 56% of workers believe artificial intelligence will empower them to learn and develop new skills, 44% think AI would make their current skills obsolete. Businesses have to eliminate hesitations around AI and train staff to save time on tasks. This will have a positive impact on productivity. 20% of companies say that they expect to take steps to train staff to use AI properly so that they can boost their overall productivity. The top industries that are following this trend include financing and accounting, marketing and telecoms.

How are Businesses Utilising AI for Recruitment Purposes?

Over half of jobseekers have openly admitted that they would be happy applying for a job where a small part of the process is driven by artificial intelligence. This includes sourcing, screening candidates, creating job adverts and scheduling interviews. AI is helping candidates to save time during the application process too. They can use tools that include ChatGPT to polish their cover letters and CVs. Half of jobseekers have said that they would be happy to share their data with an AI platform, if they feel as though it would match them better to new and upcoming positions.

There are some concerns, however. 72% of people say that they worry about AI not picking up a number of blind spots, and they think that it should be mandatory for companies to outline how it is they intend to use AI in the recruitment process. One quarter of big businesses expect to increase the use of AI in recruitment by the end of 2023 and right now, it seems that the concept of using AI in recruitment is evergreen.

Julius Probst from the European Labour Market

When you take into account the fact that inflationary measures are in place, it seems that candidates are now being forced to explore opportunities that offer a higher salary. This is leading to increased movement within the job sector. This heightened sense of mobility is helping to underscore the battle for talent. Businesses now need to emphasise the need to exert additional effort when it comes to attracting and retaining the professionals they need. Companies are also beginning to recognise the value of the recruitment process, in terms of the skilled professionals they require.

Of course, as the job market changes, it remains more important than ever for businesses to embrace solutions such as AI. It’s the only way that they can stay ahead and secure the talent they need. By combining strategic talent management with AI, it seems that organisations can achieve their objectives much more efficiently given the current climate.