The Recession != Dot-com Crash

Prior to this recession, the (informal) consensus has been that the IT job market is recovering from the dot-com crash whose effects of widespread IT job losses hit a nadir in 2003. Looking at Figure 1 below that looks at the rate of advertised IT positions, it would appear that the recent recession had the same effect.

 

Figure 1: Advertised IT vacancies as of 29 March 2010 (old.jobstats.co.uk)

This is not the case this time round. Unemployment has been felt across the wider economy, and it was the financial services sector that bore the public brunt (although public sector looks like being the vanguard of a second wave after the election). But is the IT profession shedding jobs in large numbers? There have been no high-profile press reports and official unemployment statistics lag behind a dynamic situation, especially when close analysis under the headline figure is needed.

Closer analysis of the available vacancies data paints an unexpectedly positive picture. Figure 2 looks at trends in advertised IT salaries. If widespread IT job losses were in the offing we would expected advertised salaries to fall in response to supply exceeding demand (as was the case in 2003). This has clearly not happened.

 

Figure 2: Advertised IT salaries as of 29 March 2010 (old.jobstats.co.uk)

Closer analysis of the available vacancies data paints an unexpectedly positive picture. Figure 2 looks at trends in advertised IT salaries. If widespread IT job losses were in the offing we would expected advertised salaries to fall in response to supply exceeding demand (as was the case in 2003). This has clearly not happened.

This is not to say that there have not been some job losses due to the recession (e.g. the IT staff at Woolworths), but loses have not been widespread and appear to have be consequential of business failure in other sectors of the economy. The drop in vacancies is most likely due to ‘churn’ being taken out of the job market: employees are not risking job moves, and employers are cautious about hiring. As noted above there are signs this is bottoming out.
 
The recession is therefore qualitatively different for IT professionals, than the dot-com crash. Could IT be seen by the wider world as a relatively safe bet? For sure, the credit bubble has more than wiped out the memory of the much smaller dot-com one! Given the widely-reported problems in recent years of some computing departments being unable to recruit the numbers of students they did at the turn of the millennium this must come as a relief.