Hiring Trends Index: a look at the recruitment landscape of Q2 2023

Top takeaways from the Hiring Trends Index Q2 2023

• The labour market continued to grow in the second quarter as the employment and the unemployment rate both increased, to 76% and 4% respectively.
• 81% of businesses recruited in Q2 2023, slightly more than the last quarter (78%) – although vacancies have been dropping, they remain above 1 million (25% higher than pre-pandemic levels).
• More than a third (34%) of businesses increased recruitment in the second quarter of 2023, same as Q1 2023.
• Average time to hire decreased from 6.4 weeks in Q1 to 5.8 weeks in Q2.
• 57% of businesses are confident they will recruit the people they need in Q3 2023 – which is consistent with Q1 2023 and rising from 53% reported in Q4 2022.
• Businesses have started to implement AI tools to automate processes. The most popular departments where AI is used include; Technology/IT (23%), Operations (11%) and PR and marketing (10%).
• 2 in 5 (40%) businesses also report using AI in the recruitment process to source (11%) or screen candidates (12%), schedule interviews (11%), create job adverts (11%) and interview questions (10%).

Recruitment in Q3 2023

Business confidence has ticked up in the beginning of the year, and majority (57%) of employers continue to feel confident about recruiting the people they need.

26% of businesses plan to increase recruitment in Q3 2023, with transportation and distribution (35%), hospitality and leisure (34%) and medical and health services (34%) being the most likely industries to increase hiring. Of those who plan to hire, 16% say they will increase recruitment spend for specialist roles. Meanwhile, 14% plan to hire more temporary workers, freelancers or contractors.

In the second quarter of 2023, wage growth picked up again, reaching a historic high at 7.2% year on year in April 2023. This was partly due to the increase in national living wage, which was set to £10.42 an hour for those aged 23 and older.

In the coming months, economists are expecting a wage-price spiral scenario; meaning further wage growth could fuel inflation and vice versa. The demand for higher wages is unlikely to slow down as the most significant price increases are felt across basic needs such as housing, energy and especially food. Around 4 in 10 adults are finding it difficult to afford rent or mortgage payments – up from 25% last month.

At the same time, labour shortages in certain industries are an ongoing factor that strengthens the negotiating position of workers. For UK businesses to continue growing and for an improved GDP outlook, companies need to streamline their hiring and retention efforts.

In our previous edition of HTI, we’ve found that 16% of businesses were investing in technology and automation to supplement their workforce. As the technology in this space advances, businesses may lean more on AI and automation to increase productivity.

There is also increasing interest in AI, and 33% of businesses say they are ready to hire more for roles that use AI in the next quarter.

Integrating AI into the workplace

According to our findings, 53% of businesses use AI in some capacity in their business to automate processes. When broken down by organisation size, 39% of small businesses, 56% of medium businesses, and 79% of large businesses use AI tools in their business.

The most popular departments where AI tools have been implemented are: Technology/IT (23%), Operations (11%) and PR and marketing (10%). On average, almost 1 in 5 (19%) businesses say they expect to increase their use of AI within day-to-day work before the end of 2023.

So how do workers feel about using AI at work? We previously explored this question and found that 2 in 5 workers think they don’t have the necessary skills to make the most of AI tools available in their workplace.

Younger generations and office workers are generally more excited about the future possibilities and innovations AI will bring to their industry (48% of Gen Z and Millennials vs. 33% Gen X and Boomers, 59% of office workers vs. 47% of manual workers). Yet, the general perception on AI is divided.

While 56% of workers say AI will empower them to learn and develop new skills, 44% think AI would make their current skills obsolete or unneeded. Therefore, businesses play an important role in eliminating hesitations around AI and training staff to save time on tasks and increase productivity.

20% of businesses say they expect their business to take steps to educate and train staff on using AI to improve their productivity. The top industries that expect this are: Finance and Accounting (30%), Media/Marketing/Advertising/PR and Sales (29%), IT and Telecoms (28%).

How are businesses using AI for recruitment?

These applications correlate with candidate expectations as over half (52%) of jobseekers say they would be comfortable with applying for a job where a small part of the process is driven by AI – mostly including sourcing and screening candidates, scheduling interviews, and creating or tweaking job adverts.

AI is also helping candidates save time during the application process, as they can use tools such as ChatGPT to polish CVs and cover letters. Almost half (46%) of jobseekers say they would be happy to share their data with an AI platform if they would receive better matched, personalised job offers.

However, candidates have some concerns as well. 72% say they are concerned about AI not picking up blind spots and think it should be mandatory for companies to outline how and why they are using AI in the recruitment process.

With almost a quarter (23%) of large businesses expecting to increase the use of AI in the recruitment process by the end of 2023, AI in recruitment appears to be an evergreen topic.

Summarising our findings, European Labour Economist Julius Probst said