Finance and accounting

Public Sector Market Update Q3 2015

Overview

 
In post general election 2010 the public sector market went into a shut down and there were very limited opportunities for finance professionals to move into new roles. External recruitment into public sector organisations required high level approval and the usage of interim staff was restricted. Central government organisations imposed both recruitment and promotional freezes with the aim of limiting salary costs and protecting jobs while meeting government imposed cost improvement targets. However’ as a core component to any well run organisation key positions within finance were still recruited.
 
The impact of the 2015 election hasn’t felt as drastic but austerity measures continue to inform a cautious public sector recruitment market. The July 2015 public sector spending review, titled ‘A country that lives within its means’ highlights the fact that:
 
   “Employment in the UK is back to near record levels with 31 million people in work, having risen by almost 2 million since 2010. Between the first quarter of 2010 and the first quarter of 2015, over 5.5 jobs were created in the private sector for every public sector job lost.”
 
The interesting observable effect of this is that there is more mobility for candidates moving between the public and private sectors. This trend has seen candidates moving on from public sector roles with limited progression opportunities thus creating job openings in their leave.
 
As private sector recruitment activity ramps up there are less available candidates within the market as a whole and lots more opportunities for candidates to move between sectors and further their careers. Tied in with this is the fact that following on from the post 2010 election NHS white paper there was a move towards ‘any willing provider,’ which allows any private sector organisation to pitch for work within the NHS. This means that candidates who have previous experience of this ‘bid-for-work’ model within the NHS are of great interest to private sector providers. This increasingly competitive market is a draw for public sector workers, which has in turn opened up more opportunities in the public sector.
 

Attraction and retention

 
At senior levels, £50K+, there is still a good range of candidates for most roles, but within the £35-£50K market, particularly in newly or recently qualified, there is a distinct shortage. We have seen evidence of candidates receiving multiple offers as well as counter offers from current employers. Local councils, further education colleges and universities are all offering to match external offers in a bid to retain staff. It’s a definitive move to a more candidate driven market in comparison to recent years. 
 
Pay freezes and the suspension of promotions have meant that high calibre candidates within the public sector have been forced to look elsewhere to move their careers forward. Also, with the downgrading of some public sector pensions and benefits, there is less of a pull to stay within a role compared to previous years. 
 

Candidate Behaviour

 
We have seen counter offers in a number of public sectors including local government, further education and higher education, including one instance where a candidate on a £45K salary was offered £54K to stay in a role. In most instances the candidate will still move regardless of any counter offer, while those that don’t often find that the increase in salary hasn’t changed their reasons for leaving, and will move within 6-12 months. 
 

Looking ahead

 
Without interesting opportunities for talented individuals to progress internally there is a risk of continued movement of talent from the public to private sector. This is a particular concern for organisations with strong graduate training schemes, such as the NHS and central government, where a lot of time and effort will be place into developing talent for it to leave upon qualification. This means that the public sector will have to compete hard against the private sector to retain talent and replace any individuals who do leave.
 
This is a particular challenge with the significant cuts the latest spending review is placing on organisations, requiring that they model how to save between 20-40%. Selling opportunities to potential candidates will be a real challenge against the climate of austerity.
 
There is likely to be an increase in the usage of temps where the public sector is challenged to decide if they are positioned to replace a role or are better suited to consolidate with the existing team.
 
To discuss your future finance recruitment needs, get in touch with your local Michael Page Finance team.