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Is the credit crunch media hype?

The recession fears have been spoken about for around 6 months now, with the fear of the unknown to the hope of when the British economy begins seeing an improvement. However, in Scotland, the credit crunch does not seem to be affecting every aspect of the economy.


From the housing market to the employment sector for graduates, the recession appears to be taking its toll, but in unexpected ways.

House prices throughout the country are seeing around a 35%-50% decrease. As a ‘domino affect' of this, tenant demand has risen sharply.

Houses

* Credit Crunch Website - Saturday, July 12 2008

* House prices are crashing 35-50%

* Citylets' report for Q4 2007 showed an increase in rents, homes being let more quickly and increased tenant demand - all helping to drive up the base index of Scottish rents by 2.6% on the same period in 2006.

* Link to Home.co.uk website

* Thomas Ashdown, managing director of Citylets said: "We've just seen our busiest January ever, with visitor numbers 41% higher than in 2007. The evidence strongly suggests that although Scottish property price growth remains positive, many would-be-buyers are playing it safe for the moment and are happy to carry on renting.

* Construction, which accounts for almost 7% of Scotland's GDP, grew strongly between 2001 and 2006 but has since been in decline, with house builders such as Taylor Wimpey, for example, cutting 90 jobs in Scotland and 600 in the UK overall. (Read More)

* Retailers painted a less gloomy picture, with the Scottish Retail Consortium saying total sales in March and April 2008 were up by 6% on the previous year, compared to 1% for the UK. (Read More)

Financial

The financial sector is feeling the biggest bite of the credit crunch, with one of the big four financial companies, Ernest and Young, reporting that graduate recruitment

* According to a poll of 1,819 financial professionals, 64% of UK City professionals believe that lay-offs are on the cards with nearly half of these (49%) believing that redundancies are inevitable, answering that redundancies are now "very likely". Only 3% of UK City respondents saw no fall-out from current events. (Read More)

* Over half (57%) of the top 100 accountancy firms say they are going to decrease or keep staff levels the same next year, according to recent research by web recruiter cvmail. Whilst only 5% of accountancy firms said they actually intended to cut headcount, this nevertheless represents the first pause in growth since since 9/11. (Read More)

* Despite this year's slowdown in recruitment, accountancy firms say that one of the biggest issues they face in the year ahead is attracting a higher quality of candidates with 91% of respondents saying that it is a high priority in the year ahead. (Read More)

Accountancy Firm Delay Graduates

Although none of these graduates, according to Ernst and Young, have had their offers withdrawn, the majority of the graduates affected have already accepted alternative offers. (Read More).

* According to a report in the Telegraph, the accountancy firm has told six per cent of those graduates already promised jobs at the company that they may have to wait until spring next year to start work.

* Competitors of Ernst and Young are believed to be following suit and delay their graduate schemes.

* The uncertain economic conditions have hit graduates expecting to start work at Ernst & Young later this year. (Read More)

Ernst & Young blamed "current market conditions" for the move and said that some graduates who had been promised jobs in the corporate finance department had already been offered roles in its tax department. (Read More) The paper explained that the economic slowdown had reduced the number of major mergers and acquisitions that are occurring, cutting the work for the corporate finance departments.

Recently, a report warned that concerns about debt were influencing career choices for graduates. The Association of Investment Companies said worries about money were encouraging university leavers to opt for well-paid jobs, rather than their dream options. (Read More)

* Over the past decade we have seen labour shortages and recruitment difficulties lead to a more competitive job market, meaning that employers are turning to agencies and head hunters to find the talent they need.

* This is making recruitment expensive for many organisations - in conflict with the potential constraints placed on organisations by the global credit crunch. (Read More)

* Recent research I conducted at Cranfield (in conjunction with Monster.co.uk) suggested that e-recruitment may provide a solution to these issues. Online recruitment may have grown rapidly over the past 10 years, but my experience shows many organisations are still not taking advantage of the full functionality of this technology to attract, sift, manage and respond to applicants.

* Only about 5% of public sector recruitment spend is currently online, suggesting that this sector may be missing a trick. Interviews with 24 employers across the public, private and not for profit sectors found that effective use of e-recruitment could provide a wide range of benefits to employers.

* Significant cost savings can be achieved through the reduction in agency and advertising fees, less need for paper and postage and a drop in headcount due to administrative savings. E-recruitment can also lead to considerable efficiency savings through the move to a more streamlined process. Vacancies can be posted online immediately and reviewed as they arrive, making the process much faster. This means that the overall time to hire is greatly reduced, so there is less chance of a good candidate being recruited by a competitor before the process is complete.

 

Graduate and HR

* Outside of finance, it's similarly hard to predict. A slowing economy usually leads to lower profits, less expansion and fewer jobs, which implies that the graduate job market should be somewhat depressed. The truth however seems to be just the opposite. The Association of Graduate Recruiters (AGR) claims that the number of graduate vacancies will increase this year by 16.4 per cent with wages increasing by an average of 2.1 per cent, and says there is a fear that some companies may not even fill all their vacancies. (Read More)

* So far, the credit crunch hasn't had any major effect on HR recruitment. In fact, employment within the human resources sector is currently at a record level, with companies remaining optimistic about prospects for the year ahead.

* Some of the large investment banks have indicated that HR will be busy this year due to growth in graduate recruitment, as well as an increased focus on learning and development - driven by the need to retain in-house talent and to further develop existing employees.

* Experian said growth in Scotland would drop from 1.7% to 1.6% in 2009, before rising to 2.5% in 2010 - faster than UK growth for the first time since 2001. (Read More)

New Trend for Recruitment

* We are surrounded by technology on a day to day basis. Some of this is the same technology repackaged to give a new appearance and some is so new it is still being developed. However, with reference to recruitment, the method of selecting the ideal candidate could be set for a huge change.

* With the use of ever increasing speeds of broadband and advances in video recording, the use of technology to apply for available job positions could be the future of candidate selection and recruitment as a whole. Indeed, at the moment, it is not uncommon for employers to request online profiles of potential candidates on such websites as facebook and bebo. Their argument being that looking at an online profile, compared to an unanimated CV with a list of skills and qualifications, can give an employer a better insight into a candidate applying for a position. Additional ways of viewing a potential employee is through online blogs and video clips. All of these methods are being seriously considered as new ways of finding employees.

* Although employment agencies have techniques of appraising candidates, such as online psychometric testing which may give an outcome of a candidate good at the open position but the candidate is not confident enough to carry it through, the use of video CVs can be beneficial to employers, allowing them to see the personality and spirit of a potential candidate.

* New research in to this area by Career Publisher Vault Inc indicates that 89% of American employers would consider watching a video CV as a method of searching for an ideal candidate, however, the research also found that only 17% of employers have seen one. The overall findings of the research found that more than half of those investigated believe that video CV’s are the future of job applications.

* Despite this finding, it could be argued that such advancements in recruiting methods could only be applied to specific employment sectors, such as marketing, where the presentation skills, determination to succeed, qualities and flair of the potential candidate has the ability to come through in a visual aided résumé, allowing the candidate to give strong examples from their experience.

* This development in the sector, however, like anything, will have its disadvantages. Such fallbacks include the inability to produce good quality videos as well as videos which are too lengthy. One of the main disadvantages to video CVs is also the time consumed to watch potential applicants to a job position, as well as the storage required by recruitment companies to store the media.

* It should also be noted by candidates that unless the recruitment company has specifically requested this new form of application, the more traditional method of a typewritten CV by email or post is more preferred.

Recruitment for commonwealth games

* It is expected that the initiative will affect around half of the entire school leaving population in Glasgow next year, with the rest moving into further education. A total of 2,000 construction apprenticeships will be offered, most with private construction company City Building, who are owned by Glasgow City Council. City Building last year received over 2,500 applications for just 77 apprentice positions.

 

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