Recruitment freeze ends salary boom - for now

The second half of 1999 saw IT salaries stagnate during the Y2K freeze. Nicholas Enticknap reports

The second half of 1999 saw IT salaries stagnate during the Y2K freeze. Nicholas Enticknap reports

The last quarter of 1999, and particularly December, saw levels of IT recruitment plummet, as IT sites across the UK froze development activity and concentrated on seeing in the new millennium safely.

The jobs on offer fell by more than a half, relative to the same period in 1998, from 58,000 to well under 29,000, according to the SSP/Computer Weekly Quarterly Survey of Appointments Data and Trends. However, this total was still greater than in any fourth quarter in the six years from 1990 to 1995.

Over 1999 as a whole, there were 170,000 IT jobs advertised, and this was the third highest total of the decade, after 1998 and 1997 respectively.This figure was 25% above the 1996 total, and well over three times the 1992 total. With recruitment expected to pick up again during the first quarter of this year - when user "millennium freezes" end - the outlook for the future is encouraging.

Two job categories fared notably better than the rest. The number of software engineering jobs on offer fell just 18%, from 2,900 to 2,400, while networking specialists saw a fall of just 12%, from 2,800, to a little under 2,500. This figure is nearly 9% of the total, the highest fourth quarter figure since 1994.

Comms on the up

Part of the reason for networking specialists doing relatively well is that communications companies actually increased advertising over the quarter, offering 3,500 jobs as against 3,400 a year ago. This was the only industry sector to post an increase, for the second quarter in succession. As a result, skills in demand by these companies, such as Lan and Wan expertise and experience of Novell, X.25 and X.400, all showed significant upward movement in the skills league table.

Three job categories fared significantly worse than average, in all three cases, for the second quarter in succession. PC support posts were down by over 70%, from 2,900 a year ago to just 800 this time. Operations posts fell by 68% from 1,800 to 560, and systems programming posts by the same proportion from 960 to just over 300.

Analyst/programmers also suffered, with just 4,300 jobs on offer over the past three months, compared to nearly 13,000 a year ago. This, along with the fall in demand for operators and systems programmers, reflects declining recruitment from mainframe and midrange sites.

IT sites running open systems advertise more often for systems developers than analyst/programmers, and this is now the largest job category, with more than 5,100 jobs on offer in the fourth quarter. Over 4,300 of these were for platforms categorised by SSP as "micros" - basically Windows/Intel-based platforms.

Salary increases on offer during the quarter were not generous, as you would expect in a buyers' market. The median increase in salary offered across all job positions was 3.4%, which compares with 5.1% a year earlier.

The average salary figures across all industries, geographies and platforms, for some major job titles, show that the rise in salaries on offer among these job positions differed widely over the quarter.

The surging demand for management consultants so evident in 1998 has tailed off, and they were offered, on average, a little less than a year ago, for the third quarter in succession. System analysts have only seen a marginal rise.

At the other end of the spectrum, IT managers saw the salaries on offer rise 7% over the three months. Salaries offered to network support technicians and operators are also up by above average, for the second quarter in succession.

Programmers, analyst/programmers and systems developers have all seen salaries rise broadly in line with the market overall.

By platform type, it was the mainframe and proprietary midrange sites that reduced recruitment the most. In the IBM world, advertising by System 390 and AS/400 sites was down to a quarter of the level of a year ago, while non-IBM mainframe sites battened down the hatches even more. Only 170 jobs of all types were offered by these sites over the three months, down from 900 a year ago.

Mainframe sites in total accounted for just 7% of the jobs on offer over the past three months, compared with over 12% for the same period a year earlier. This is the main reason why jobs for operators and systems programmers have declined so rapidly.

Unix sites have also seen jobs decline sharply, with 3,300 jobs on offer this time compared to over 8,000 a year ago. All of this means that Windows/Intel-based positions, which numbered 18,500 over the three months, accounted for two thirds of all the jobs on the market.

Geographical spread

Geographically, the decline in the number of jobs on offer was spread rather more evenly. Best off was Scotland, but even here positions available fell by 42%, while the Wales and West region was worst off with a 62% decline.

Although Wales and the West fared worst of the seven regions analysed by SSP over 1999 as a whole, the region did top the table in 1998. The area also enjoyed market growth of over 60% in that year and in 1997, so IT professionals working there have little grounds for complaint.

Outer London was the region that did best of all over 1999, with the fall in recruitment limited to 24% over the year as a whole. That statistic masks the fact that recruitment fell by a greater rate in each succeeding quarter, as indeed it did in inner London.

Analysed by industry sector, recruitment demand fell much more sharply among user companies than within the IT industry itself, as it did throughout 1999.

This, as we have seen, is partly accounted for by an increase in recruitment by the communications company sector. Overall, IT industry jobs available fell from 28,000 to 15,500, a decline of 45%.

All the individual user industry sectors fell by more than this except the public sector, where for the second quarter in succession the decline was less than 30%.

In the financial area, the biggest sector, jobs offered fell by more than 60%, from 8,200 to 3,100. The retail, engineering and energy sectors all slashed their recruitment by more than two-thirds compared with a year ago.

Breakdown of jobs by region

Region 4Q99 4Q98 Change
Inner London 4,198 9,630 -56%
Outer London 3,749 7,295 -49%
Southern England 7,703 15,954 -52%
Wales & West 2,432 6,398 -62%
Midlands & East 3,737 7,579 -51%
Northern England 3,612 6,923 -48%
Scotland 1,216 2,113 -42%

Breakdown of jobs by industry sector

Jobs 4Q99 4Q98 Change
Computer vendors 697 1,039 -33%
Software houses 11,240 23,593 -52%
Comms companies 3,519 3,391 +4%
Banking/finance 3,108 8,207 -62%
Distribution/retail 855 3,081 -72%
Media/publishing 476 996 -52%
Manufacturing 326 900 -64%
Engineering 571 1,938 -71%
Utilities/energy 129 501 -74%
Public sector 794 1,121 -29%

Jobs offered in each Q4 of the last decade

4Q90 18,963
4Q91 12,111
4Q92 11,490
4Q93 13,981
4Q94 21,178
4Q95 27,443
4Q96 32,549
4Q97 52,401
4Q98 58,020
4Q99 28,701

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