‘Irresponsible’, ‘irrelevant’, ‘fruitless’. This was the reaction in the design world to the Government’s announcement last week that it will give companies that recruit people who have been unemployed for more than six months ‘golden hellos’ of up to £2500.
The initiative was unveiled at a jobs summit hosted by Prime Minister Gordon Brown on 12 January, where he promised to help 500 000 people get into employment or training in a bid to staunch Britain’s growing number of unemployed. There are currently 1.8 million people out of work in the UK, and the British Chambers of Commerce predicts that the figure could reach 3 million by the end of the year.
While initiatives such as the £500m ‘golden hello’ scheme will undoubtedly encourage employers in some sectors to recruit, those in the design industry suggest that more sophisticated strategies are needed to drive recruitment levels in skilled creative sectors.
Michael Smith, director of Cog Design, which is in the final stages of recruiting a creative director and a designer, says, ‘The problem with schemes like the “golden hello” is that they’re all low-skilled, and not relevant to our industry. You can’t work your way up in this industry in the same way that you used to be able to.
‘It can be difficult for established consultancies to engage with initiatives at this level. When I make the appointments I’m going to give the jobs to the right people – I’m not going to employ someone who’s been out of work for six months just for the sake of a couple of grand.’
Cog Design, in any case, is in the fortunate position of being able to recruit permanent staff in the current challenging financial climate. Smith says this is because the consultancy does a lot of work in the arts sector, where budgeting is longer-term, and clients are more financially stable than in the tempestuous commercial sector.
And it seems this client unpredictability is the main factor hampering growth in the design sector. Pretty much every consultancy Design Week speaks to is adamant that there is still plenty of work around, and clearly consultancies are keen to recruit enough staff to manage this workload. But many are wary about taking on permanent staff as there is no way of forecasting their economic situation beyond three-to-four months.
Claire Vidler, managing director of design recruitment specialist Blue Tree Recruitment, says, ‘The concern is for clients whose work is building up – they are not recruiting permanent personnel as they do not have the confidence to be able to predict what the workflow will be in six-to-12 months due to the constant changes in the marketplace.
‘They want stability, they want to recruit, but they need to be cautious.’
Vidler says a better way to stimulate design recruitment would be for the Government to make it easier for consultancies to get loans to help them through 2009, through initiatives such as the Working Capital Scheme, unveiled on 14 January, which would guarantee up to £20bn of loans to small and medium-sized firms to help them survive the downturn. The cash would allow banks to free up working capital to sustain existing loans and create new ones, according to Business Secretary Lord Mandelson.
The benefits for consultancies are two-fold. First, it makes it easier for them to take out guaranteed loans, as Vidler says, and second, it enables their clients and potential clients to access cash so that they are able to commission more work, and less likely to default on fees for existing work.
It is clear that freeing up cashflow is more likely to encourage consultancies to take on staff than simple incentivisation. But for its proposals to be effective, the Government needs to ensure that it is not ignoring the details.
Vidler says, ‘Hopefully, the loan guarantee initiative will help consultancies that are experiencing cashflow problems continue to trade. However, it depends on the amount offered and if they are considered to be the “smaller, viable, credit-worthy firms hit by the downturn,” as stated by Lord Mandelson.’
She adds, ‘I do not believe there is enough clarity for any business about how they can take advantage of this scheme. Indeed, having spoken to my own bank, Barclays, they stated they have not yet received clarification on who will be able to benefit and how long it will take to receive the funds – will it be a case of too little, too late?’
The Working Capital Scheme
• Companies with a turnover of up to £500m are eligible to apply for funds under this scheme
• Barclays, HSBC, Lloyds TSB and Royal Bank of Scotland have all shown interest in the scheme, according to the Government
• The Government hopes that the first £1bn of guarantees will be operational by 1 March
• If the scheme proves successful, the Government will make further guarantees up to 31 March 2011