Covid-19 has had a massive impact on nearly every aspect of our lives and the full repercussions are still unknown. It is clear, though, that the nation is already experiencing a recession the likes of which has never been seen before – even if we can’t officially call it a recession yet. As figures from the first full month of lockdown emerge, the scale of unemployment in the UK is beginning to be known. Chancellor Rishi Sunak is now warning of a “severe recession”. Where does the IT and internet sector fit within this? We look into the impact of Covid-19 on the sector and analyse what that means in both the short and long term for those recruiting in the industry.
The latest ONS figures show that both employment numbers and vacancies are falling, though different industries have felt the impact with varying levels of severity. Whereas travel and hospitality immediately felt the brunt of the pandemic due to restrictions on travel and the closure of pubs and restaurants early on, IT and Internet wasn’t fully affected until April.
WaveTrackR data has shown that, bar a slow start in January, job posting in the IT and Internet sector was relatively stable in the first three months of the year. Indeed, there was an increase in jobs posted in March, with the week from 16th to 22nd March seeing the highest number of IT and Internet vacancies posted in the year to date. This is likely due to the increased demand for services as businesses went remote and all those that could encouraged home working. Producers of workflow software and video conferencing apps, Cloud vendors, and IT suppliers of products such as headsets, VPNs and wireless LANs all experienced a surge in demand.
However, as lockdown rolled into April, the slowing down of business and curtailing of projects began to hit the IT sector. From a 31% increase in the final week of March compared to the pre-March 2020 average, job posting dropped to a massive 73% below that average in the first week of April. The lowest point came at the start of May – in the week beginning 4th May, job posting fell to -93% compared to the pre-March 2020 average. Applications have also fallen as vacancies have decreased but, although the downward curve was steady throughout March, the drops were less marked in April.
Whilst much of the data makes for stark reading, there are signs that the industry is starting to tentatively pick up. The latest figures, from the week 11th to 17th May, show the biggest increase in jobs posted in a month and the second highest since the end of March. Applications have also begun to pick up again in May, with a gradual increase over the past few weeks. We are still seeing minus percentages compared to the pre-March 2020 average but it is certainly a step in the right direction. The average number of job postings for April was at -75% and applications were at -35%, a huge dip below the pre-March 2020 averages. There are already signs that May will fare slightly better.
So what are the short and long term futures for IT and Internet? The chancellor has warned that it was “not obvious there will be an immediate bounce back” from recession. However, he has also admitted that it is impossible to confidently predict the long-term effects on the economy as economists were “dealing with something unprecedented so economic forecasting is not as precise as it might normally be”. What is encouraging for the IT and Internet sector is that it is likely that the pandemic will result in long term shifts in the way we work and play, with far more emphasis on what we can do digitally. The sector will play a large part in how we live post-pandemic and that should help get the industry moving again.
