HERTFORDSHIRE COUNTY COUNCIL
POLICY & RESOURCES CABINET PANEL
THURSDAY 12 MARCH 2009 AT 2.00 PM
THE CREDIT CRUNCH: EMPLOYMENT ISSUES AND THE IMPACT OF RECESSION ON THE COUNCIL’S WORKFORCE
Report of the Corporate Director of People and Property
Author: Carole Grimwood, (Assistant Director, Human Resources)
Tel: 01992 556667
Executive Member: David Lloyd
1. Purpose of the Report
1.1 Over the past year, the UK economy has moved into recession and this will affect not only Hertfordshire residents and service users, but also our members of staff. Following the general report on the Credit Crunch to this panel in January 2009, a further report was requested on employment issues for HCC. This report provides the Panel with information on the likely impact(s) of a recession on the County Council’s workforce, and our response to this.
2. Summary
2.1 The current economic climate is likely to have a number of implications for the recruitment and retention of the County Council’s workforce, and there are a number of measures we have taken to help our members of staff, which are detailed in this report.
3. Recommendation
3.1 The Panel is invited to consider the information contained in this report and to identify both any additional/further action that can be taken by the County Council.
4. Background
4.1 Impact of recession on turnover, vacancies and vacancy
management
Economic factors continue to impact on workforce planning. In December 2008, UK unemployment stood at 6.1%, while the rate for Hertfordshire was 1.9%. Over the last year, the claimant count in Hertfordshire increased by 64.8% which was higher than the national increase of 45.9% and the East of England increase of 52.1%. Nevertheless, unemployment is still relatively low and this, combined with our proximity to London and the high cost of living in the South East, still creates a challenging recruitment market - especially where there are national skill shortages.
4.1.1 Changes in Service Demand
Service departments are already starting to see changes in demands as the economic situation has declined. We will need to continue to work with services and monitor this in terms of resource requirements and to take action as required.
4.1.2 Reduction in Turnover
We are beginning to see the impact of the economic downturn through a reduction in voluntary turnover. In the three month period from August 2008 to November 2008 voluntary turnover overall reduced from 12.2% to 11.8% which is just below our target of 12-14% - although this varies across employment groups. We may see this continue to reduce further over the next 6 to 12 months. Where this occurs there is a risk that the workforce becomes stagnant, with fewer new ideas and promotional opportunities arising, however it should benefit the County Council in shortage skill areas. Continued monitoring is required.
4.1.3 Shortage Skills
Although the recruitment market for shortage skills (e.g. engineers, planners, social workers) remains challenging, the County Council’s activities in this area have been successful to date. We currently have no vacancies for qualified engineers and only one planning vacancy. Whilst vacancies for Childrens’ Social Workers have reduced there are on-going concerns with the poor public image of social work and the increasing pressures on these professionals exacerbated by the impact of the Baby P and subsequent press coverage. Work has started nationally and locally to respond to this. Finally we are also closely monitoring the number of Occupational Therapist vacancies which are rising now that the NHS have started to recruit again.
4.1.4 Vacancy Management
There are no large downsizing or redundancy programmes planned at present. However, we are continuing to work with the business around efficiency targets and associated changes as part of the normal business planning process. Vacancy management arrangements for administrative and support posts are in place for the Service Support Review. This currently means recruiting staff on fixed term contracts or using temporary agency staff cover to ensure maximum flexibility to implement the review once the trail blazer projects are evaluated. There have been no recruitment freezes as such. Where staff are at risk of redundancy we always seek to redeploy staff and have a strong redeployment policy and culture. Alongside this, work to reduce the use and cost of temporary agency staff is ongoing.
4.1.5 Potential Benefits for Public Sector Recruitment and Retention
Based on previous experience during similar economic climates, we would expect to see an improvement in recruitment and retention in shortage skill areas after the first six months, and by June 2009 we should have a clearer picture in this area.
The availability of permanent candidates in the employment market place as a whole has risen due to widespread job losses. This, coupled with recent news that one third of employers will be laying off staff in the next year, would indicate that there will be a further influx of candidates into the recruitment market. A recent survey of over 800 people (conducted by Hays Public Services) found that job security was the prime reason for respondents considering a move to the public sector (73%), followed by a desire for a better work-life balance (59%) and better benefits (37%). The survey also found that more than half of respondents (54%) would be willing to take a pay cut for improved job security in the public sector, with 11% being prepared to take a cut of as much as 20%. This would suggest that we will be attracting a wider group of applicants.
Within HCC we are already starting to see an increase in the quality of applicants as well as increased volumes that are applying. The increased volumes, however, put extra pressure on resource. Our recent Fire-Fighter campaign has seen over double the number of applicants, with a total of 1700 applicants (840 in Herts) in Jan 09 compared to 700 (365 in Herts) in Jan 08. There has been a similar picture in the numbers meeting the basic criteria for applying to our Management Graduate scheme with 174 in Jan 09 compared to 95 in the previous year.
4.1.6 Stimulating Jobs in the Local Economy
Aside from the direct connection with recruitment and retention, there are clear links here to local economic development issues, the Sustainable Communities strategy, LAA targets and the Council’s Corporate Plan priorities.
· With our partner Manpower, we are continuing to work with Job Centre Plus, explaining the roles available and how skills may be transferable into different jobs.
· We are continuing to work closely with Work Solutions and other groups that work with adults with varying disabilities, and more recently lone parents, to help them get back into work.
· During periods of recession it becomes even more difficult for disadvantaged groups within the community to access employment opportunities – both paid employment and work experience. We are about to open discussions with Job Centre Plus about the feasibility of establishing a Local Employment Partnership. This is a national scheme to offer people opportunities to get into, or back into, the workplace by offering interviews, mentoring on job training, work trial etc. In return for this, some financial and practical support is offered.
· We are also at the initial stages of looking at how we can help young people into work. This group have been identified nationally as likely to suffer disproportionately during the economic downturn. An area of focus will be NEETs (those Not in Education, Employment or Training) and young people leaving care.
· Our workforce planning involves working closely with other agencies such as the HCTP (Hertfordshire Children’s Trust Partnership) and NHS, monitoring the workforce to ensure it meets the needs of the community. We also link in with local colleges and universities to plan for both current and emerging skills required to deliver our services.
4.2 Key Worker Housing
4.2.1 Local Issues and Impact
Although house prices in Hertfordshire have fallen 6.8% (average house price from £294,154 to £277,504 between 2008 and 2009), they have not reached levels of general affordability for first time buyers. In addition, the reduced availability of mortgages and the requirement for substantial deposits have exacerbated the problem. When combined with a general slowdown in the market, with fewer people looking to move, whilst property prices are falling, plus the slow down in new home building, this completes a particularly difficult picture.
One immediate impact of this is on recruitment (particularly of more senior staff) who are reluctant to consider opportunities which require relocation.
A further issue is the growth in the number of people who are experiencing difficulty with mortgage payments or defaulting on their mortgage. We anticipate that this will increasingly affect HCC staff as the recession deepens.
Feedback from estate agents indicates a downturn in the housing market overall. Lenders are requiring larger deposits; this means that it is becoming increasingly difficult for buyers to secure a mortgage. Those opportunities that are available are mainly at the lower end of the housing market e.g.1-2 bed homes and flats, there has been a decline in the number 3-4 bed homes available. There is an increase in lettings to Executive clients. These tend to be 1-2 bedroom flats with executive clients moving jobs and letting or purchasing small properties to live in during the week and returning home at weekends. The purchase of these flats is seen as investment for when the market improves.
4.2.2 Impact on Key Worker Housing Products
Data provided by Lea Valley Homes (LVH) shows a significant increase in the total number of enquiries regarding MyChoiceHomeBuy. Aldwyck state that “This loan is an extremely popular option for some as it can be used as a deposit. There is more interest in new products than the previous products but this is not translating into purchases. This is due to the withdrawal of the 100% mortgage, the increased deposit required and the prerequisite to have a ‘squeaky clean’ credit rating“.
Aldwyck are finding that many applicants who manage to secure a mortgage offer have this withdrawn by the lender due to the smallest of defaults.
Shared Ownership is not the product of choice for Key Workers as they cannot choose where they want to live and now have to provide up to 30% deposit. Many banks are shying away from borrowers on shared ownership schemes as they are categorized as high risk due to arrears on loans and negative equity. Last year, most lenders offered 100% loans on shared ownership deals. Now, only 3 are offering up to 90%.
Intermediate rent options are not readily available particularly in the West of Hertfordshire and are generally on mixed housing sites. Many Key Workers do not wish to live amongst their client group. Few family sized homes are available for Immediate Rent which is a problem for a number of groups and in particular overseas workers with families who are not eligible for social housing.
4.2.3 Key Worker Housing – future actions
· Review of the Council’s relocation policy and financial support package to ensure it continues to be effective in the current employment market.
· Further publicity to ensure all staff are aware of support of Key Worker Housing, including a targeted marketing campaign to encourage attendees at the Herts Home Show which is run by Lea Valley Homes
· Lobby for the release of funds from NewBuildHomebuy which is less popular with Key Workers and direct the funds to MyChoiceHomeBuy Scheme.
· Lobby for funds to be directed away from buying to the rental market.
4.3 Money advice for staff
4.3.1 Information Available
With more and more people feeling the effects of the current economic climate, we wanted to make sure that County Council employees knew exactly where to turn to for advice on debt and managing their money. Therefore we have compiled information from various sources, which is available both on Connect and in a leaflet format for those without internet access. We have also been able to gain access to leaflets from the Financial Services Authority (FSA) on various topics, including living on a budget, mortgages and retirement options.
The site on Connect contains links to information about organisations that are specially trained in providing guidance and support for people on managing their finances. Examples of organisations listed here include:
· CareWell (Employee Assistance Programme);
· Bluefin (independent financial advice);
· Citizens Advice Bureau;
· National Debt Line;
· Unison; and
· Money Advice Unit.
Screen shots are provided for further information in Appendix 1.
It is hoped that staff will find this information useful, whether they are in financial difficulty or if they just want to make their money go further.
In addition to this, we have arranged for the FSA to run some ‘Making the Most of Your Money’ courses for staff. These are free of charge and will begin in April/May 2009.
4.3.2 Credit Unions
We were asked to investigate how credit unions can assist staff. As well as the new initiative recently launched with HertsSavers, HCC already supports a number of credit unions in operation throughout the county. Therefore, the only further action needed was to provide information to staff about credit unions.