The Lockdown has ended. Now what?
Alright it hasn’t yet but what will happen when it does? I have a few thoughts on the job market. I’ve done no research on this, so the article is entirely anecdotal but built on a great deal of experience of societal economic issues. I work across the financial and intellectual property law sectors as the owner of a recruitment company and I will make reference to both whilst at the same time hopefully keeping this fairly general. Points are not in order of importance, more just in the order I have thought of them.
The government has completely underestimated the value of small businesses in my opinion.
This is critical. At the moment, support for small business is lacking. Government loans (from many sources I’ve read and anecdotal evidence) seem to be hard to get as many of the banks are adding obstacles which arguably shouldn’t be there for businesses to receive money. And, even when applications for loans are successful the money can take a long time to come through. The furlough scheme and small business grants are a welcome stop gap but if, for example, the director(s) of a small business who are paid by dividend cannot make a similar claim to 80% of personal income then they are likely to have to make employees redundant when furlough ends to financially survive. There are numerous very small firms of patent attorneys and accountancy practices who may struggle and many small businesses support these firms with revenue that will likely reduce. Or, worse, these otherwise viable business will fail due to a lack of government support that will have a consequential impact on any business they buy from.
What happens when the furlough scheme ends?
Assuming that restrictions end at the same point as the furlough scheme ends (currently the end of June), on day one companies will be faced with a substantial cost to the bottom line in respect to returning employees who have, whilst being furloughed, not been generating any income to compensate. This will of course apply to wide a range of sectors but particularly I imagine any sales environment, especially those with a medium lead time such as automotive sales, property and recruitment. I would expect a huge second wave of redundancies in June or July when the furlough scheme ends. This would be further compounded by only a partial end of lockdown with no extension to the scheme.
A much wider pool of sectors will take a considerable time to recover than is currently envisaged.
There are obvious casualties, hospitality, theatres, cinemas, airlines but there are so many other sectors that will be impacted significantly that are often unaccounted for. Marketing spend will continue to decrease, sales of equipment may be put off, non-essential office repairs held, revisions to IT systems postponed as well as web design, so many sectors will be affected by companies cutting back. And sectors that serve these industries will be equally impacted (such as recruitment consultancies for marketing professionals).
Multi-sector businesses will have a better chance of survival.
IP firms and accountancy firms are likely to be okay for the most part, or at least as a collective the sectors will be fine even though there will be corporate casualties. If firms are too reliant on a particular client or a particular sector, they may be vulnerable but a typical firm of patent attorneys works across a wide range of industries so what they may lose in engineering they will gain in biotechnology. Likewise, an accountancy firm with a strong insolvency practice is a very solid proposition. But there may be specific areas where jobs are still at risk as the cost of them cannot be carried by a firm, trade mark attorney departments may be more vulnerable (albeit there could be some positive impact in work as a result of Brexit that may mitigate) as would the more consultative practices within accountancy firms.
Jobs in industry in central services will be lost.
Massively increased volumes of work will be outsourced, I think this is more of a risk for IP than finance as companies will look to outsource much more patent work but finance departments will likely be reduced too. Finding a job in industry will be increasingly difficult. In general terms this would include all other shared service departments as well – marketing, HR/Recruitment, I.T. etc. After the economic difficulties caused by 9/11 I remember many of my friends who worked as in-house recruiters losing their jobs and I would expect something very similar now.
It will be a great deal more difficult to find a job but it may also be very difficult to find people for jobs.
There will be an initial period where more candidates are on the job market as a result of redundancy. But this pool of candidates will quickly dissipate. Some will leave their sector entirely and pursue other careers, some will find a new job and some may be out of work for a long time. Moving at a senior level will be difficult as from a hiring company’s perspective the additional expense may not be worth the risk but that may mean that competition for less experienced staff will increase significantly. For patent attorneys that will mean newly/recently qualified attorneys, where work has grown but a firm doesn’t wish to risk the additional cost of a more experienced hire, likewise for newly qualified accountants for private practices. This surge will be further complicated by many potential candidates taking the ‘better the devil you know’ approach and being cautious about moving positions.
Therefore, dependent on what a requirement is, it may be extremely challenging to source people. Acting quickly could be crucial when you are in a position to assess the impact of lockdown on overall business turnover. Waiting to hire could set back growth for years if it becomes increasingly difficult to persuade people to move. This could also have a consequent impact on salaries – in 2010/11 as the IP sector was coming out of the impact of the economic downturn there was a short term bidding war for patent attorneys with an electronics background at newly/recently qualified level with some receiving as much as 50% above what was average market rate at the time. At the same time, it was very difficult to place salaried partners with similar technical expertise as firms saw this as too risky.
Graduate/Entry Level Jobs will reduce.
Certainly, in the IP sector, firms have learnt from the 2008 financial crisis in the sense that the dramatic cutback in trainees back then created demographic gaps that the sector is still suffering from now but there will still be lower graduate intake. In more general terms, it will be extremely difficult being a graduate in 2020 or from 2019 and quite likely into 2021 too. Graduate schemes will be paired back, they will be financially easy to cut and redundancies inexpensive, so many who joined in the last year or so may find that they lose their jobs. For 2020 graduates, notwithstanding the issues of degree scoring, the competition for positions will be intense and remuneration may well decrease. Graduates will have to be far more flexible in what they require of a position and those prepared to relocate will be at a distinct advantage.
Is there hope for the future?
The article has been cathartic for me but I appreciate also pretty depressing. I don’t want to end with platitudes or false reassurances - life may well not go in the direction you anticipated. That might be a bad thing, you might be chasing what you could have had if not for this disaster and that is a perfectly reasonable response. Your life might have been better in different circumstances. But, we can’t change it. That doesn’t mean you have to accept what you have now, for many of you there will be a route to better and if you can think in terms of improving your circumstances and not trying to capture what was lost then that might be helpful. People can give you choices, keep an open mind, keep making connections and opportunities will present themselves. These will not be the opportunities you expected, not the ones you wanted or hoped for but better than what you have and that has to be worth something, hopefully a great deal.