Quarterly Talent Snapshot - Rail Q2 2023

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Foreword

Network Rail publish 5 year plan

Railway Mental Health Charter

Routes into Rail relaunch

#4 Politics & economy

Sharp upturn in candidate availability

Employers tending towards temporary hires Fewer vacancies compared to this time last year

CEO diversity is lagging behind Only half of LGBTQ+ workers are out at work UK Engineering culture not inclusive enough

Monetary policy report findings

Monthly GDP down UK denies report of deal to rejoin EU's Horizon science scheme.

Morson Quarter y Ta ent Snapshot: Q1 23 Quarterly Talent Snapshot Rail & Transportation

Foreword

Dr Gareth Owen, Morson Market Analyst

There was optimism across most sectors in the first half of 2023, with big investment plans and strong revenue growth. But much uncertainty lies ahead, as the UK economy is experiencing a turbulent ride, with a recession still likely in 2023.

pre-pandemic levels

The big opportunities and challenges that are stacked ahead of us will require a relentless focus on talent attraction and retention, concentrating on widening the talent pool through attention to welcoming diversity

Rail & transportation

Skills shortages and supply chain issues still represent the biggest obstacles to growth that breaks through

Passengers and freight at the heart of new £44bn, five-year plan say Network Rail

#1 Industry snapshot

Lack of certainty amid delays to HS2

Network Rail published its £44bn, five-year plan for the railway in England and Wales, an increase of £1.8bn on CP6 sees increased investment in tackling climate change, improving train performance, and investing in things that matter to passengers and freight users.

This lack of certainty around the creation of Great British Railways, which will take on a wide-ranging management role for “track and train”, has caused some reduction in confidence and investment by the rail supply chain, as reported by Petards

Though the increase in rail spending is welcome, the opportunity is balanced by the challenge of managing infrastructure, that in some cases is nearly two centuries old, especially when combined with the impacts of a changing climate, and significant inflation risk

The UK government decision to delay some aspects of the HS2 project is unlikely to save costs in the long term and feels like a short term fix taken by a government more focused on the general election in 2024.

Projects

HS2

Transport Secretary Mark Harper accepts HS2 delays will not save money The governments decision to delay construction of the London terminus of HS2 at Euston to save costs, will cost an initial £200m

Transpennine

The mu ti-b llion-pound the Transpenn ne Route Upgrade w ll deliver major upgrades on the 70-mile route between Manchester and York, transforming journeys across the North, better connecting towns and cities through more frequent, faster, greener trains, running on a better cleaner and more reliable railway.

East West Rail Line

This line has been designed to boost connectivity between Oxford and Cambridge, unlocking up to 103 b llion GBP of econom c growth, accord ng to the DfT

Industry headlines

Network Rail: UK industry reacts to Network Rail spending plans. While there has been some praise for the forthright admission that funds are limited, there has also been criticism that the resultant plan is limited in scope, and the underlying trend is for care and maintenance, rather than grand renewal.

RSK: Latest acquisition for RSK is 1st Inrail, a subcontractor that specialises in reactive track repairs renewals and nstallation serv ces 1st Inrail Ltd has become RSK’s 13th acqu sition of th s year so far in its continuing quest to acquire turnover to manage debt.

Alstom: Tra n maker Alstom sees higher annual margin but delays mid-term targets. Alstom, which is recovering from the costly acquisition of Bombardier's (BBDb.TO) rail bus ness in 2021, expects an adjusted operating profit (EBIT) margin of 6% and "significantly pos tive" free cash flow in the twelve months to the end of March 2024

Siemens Siemens presents €2 bill on investment strategy to boost future growth, innovation and resilience In addition, there is an expected increase of around €0 5 billion in research and development (R&D), such as artificia intelligence and the industrial metaverse in fiscal year 2023 versus prior year

Tetra Tech: Tetra Tech achieved record quarterly resu ts in key financial metr cs ncluding:

Revenue $1 16 billion, up 36% Y/Y

Net revenue $970 mill on, up 39% Y/Y

Backlog of $4 27 billion, up 18% Y/Y

Knorr-Bremse: "We as a g obal market and techno ogy leader are overcoming the cris s much better than many other comparable businesses " Desp te the inflation-related price rises, Knorr-Bremse is st ll seeing very good demand among customers n Asian and North American countries

Hitach -Thales UK regulator expresses concern over Hitachi-Thales rail signal deal. The Competition and Markets Authority (CMA) said Japan s H tachi Rail and France s Thales SA's Ground Transportation business were leading supp iers of signa ling for main ine and urban railway networks, along w th Siemens and Alstom

Supporting mental health in the UK rail industry

The Ra lway Mental Health Charter (RMHC) is a framework to help promote manage and support workforce menta wellbeing Aligned with good practice the charter responds to ndustry needs and provides targeted actions and resources for improving mental health in your company.

The ra l industry workforce are exposed to unique working condit ons Shift patterns challenging demands and working conditions, and exposure to potentially traumatic events are some of the issues that make the management of mental health in the industry particularly important. To support the workforce, it s vital for companies to take a structured and evidence-based approach to managing mental health

1500

Colleagues have engaged with the programme

£700,000

Savings from colleagues engaging with the programme rather than being absent from work.

Case study: Southeastern Railway

Sector skills challenges

The National Skills Academy for Rail (NSAR) and industry partners have refreshed the ‘Routes to Rail’ resource, in a sign that talent attraction will be key to delivering the boosted CP7 programme. It intends to deliver on the rail sector’s looming skills gap and workforce shortfall through a targeted approach to attracting new talent.

Routes into Rail has launched its new website at the UCAS Discover Exhibition in London’s ExCeL The revamped website seeks to attract a brand-new generation of talent into the rail sector bringing new ski ls and significantly increasing the workforce

Routes into Rail is the first point of contact for adv ce and information on al entry pathways into the sector for young people, and those returning to work or changing career from the military. It will also target information parents teachers and career advisors

Routes into Rail is a sector-wide initiat ve, originally launched in 2020 during the pandemic, its website relaunch will broaden its reach through showcasing the mu titude of exciting and rewarding ra l careers on offer and demonstrate that there’s a career in rail for everyone no matter their age, gender or educat on leve

Routes into Rail is funded by six industry founding partners: Network Rail, HS2 VolkerRai , Amey The Rail Industry Association (RIA), and The Department for Business Energy & Industrial Strategy (BEIS). The initiative is led by NSAR

Read the article

Solving the skills shortage by looking at the opportunities rather than the challenges

Bam Nuttall a ong with a number of other ndustry leaders, has teamed up with business transformat on enterprise Fuel Change to help bring to ife a pioneering sustainabi ity and skills deve opment programme for our next generat on of engineers

Fuel Change is an organisation working with businesses and schools to enable apprentices and new graduates to help develop solutions to the climate crisis. Its Challenge Programme forms pro ect teams of young people from businesses and organisations and sets them real world carbon reduction challenges

National infra-skills college to close

The National Col ege for Advanced Transport and Infrastructure (NCATI) was aunched by the government in 2017 as the National Co lege of High Speed Rai .

The col ege has now announced it wi l close by the end of July

“The college was a brilliant facility that unfortunately struggled to get traction with employers and new learners."

A asdair Re sner, ch ef execut ve of the C vil Engineer ng Contractors Assoc ation

Candidate availability expands at quickest rate for two-and-a-half years

The sharp upturn in candidate availability this month is a big concern for the economy reflecting the effects of a sustained slowdown in recruitment along with increasing redundancies across many sectors.

Employers are also tend ng towards temporary hires given lingering economic uncertainty And yet the labour market remains reasonably res lient, with notable demand for skilled workers, both permanent and temporary, across a multitude of sectors this month

The evident m smatch between open vacancies and the sk lls of available candidates needs to be addressed urgently and a concerted focus on upskil ing and reskill ng is long overdue

Staff recruitment held back by lingering uncertainty over the outlook

Recruitment consu tancies indicated that compan es cont nued to hesitate to take on add tional staff in June as uncertainty over the economic outlook weighed on hiring decisions across the UK

The latest survey data pointed to a solid fall n permanent staff appointments n June, albeit w th the pace of contraction easing from May's near two-and-ahalf-year record At the same time temp billings growth p cked up s ightly from May's recent ow but rema ned mild overall

There were 265,000

fewer vacancies in April to June 2023 compared to the same period last year

Candidate supply rises rapidly in June

The hiring slowdown and company ayoffs mpacted staff availability which rose for the fourth straight month in June Moreover, the atest upturn in overall candidate numbers was the sharpest recorded since December 2020, w th both permanent and temporary staff supply expanding at accelerated rates

Starting pay increases at softest rate since April 2021

Latest data revealed further marked ncreases in both starting sa aries and temp pay at the end of the second quarter Panel members frequently mentioned that the rising cost of living and compet tion for skilled staff had pushed up starting salaries and temp wages That said remuneration for both permanent and temporary staff rose at the slowest rates for over two years in June.

Vacancy growth eases to 28month low

Overall vacancies continued to rise in June but the pace of expansion softened for the fourth month in a row Furthermore the rate of growth was the softest recorded since the current sequence of rising staff demand began in March 2021

Underlying data ind cated that a slower uptick in permanent vacancies offset a quicker rise in demand for short-term staff

CEO diversity: why isn’t the face of leadership changing?

CEOs in the FTSE 100 are still overwhelmingly male and white, despite widespread corporate diversity efforts. A lack of adequate succession planning and risk aversion mean many companies are opting for what has worked in the past.

The sort of person who gets to lead a FTSE 100 company has been under the microscope for more than a decade Over this period several government reviews have examined the shortfall in female or nonwhite d rectors n blue-ch p C-suites Although progress has been made there’s stil a long way to go with on y 20% of FTSE 100 CEO's identifying as fema e or person of colour

According to Raconteur's CEO Index: Out of 97 FTSE 100 CEO's:

9 are women compared with 51% of UK popu ation

11 have come from a non-white European background (18% of the UK population are from an ethnic minor ty)

not one has publ cly come out as LGBTQ+ (3.5% of the UK popu ation are LGB and 0 5% say their gender identity is d fferent from their sex reg stered at birth)

not one has declared a disabil ty (people with disabilit es make up 21% of the popu ation)

Black and ethnic minority workers twice as likely to be unemployed

Black and other ethnic minority workers are more than tw ce as likely to be unemployed than white staff according to ana ysis from the TUC Women from ethnic minorities are hit even harder, facing an unemployment rate of nearly three times that of white men

The union body looked at the most recent labour f gures from the Office for National Statistics and found that the unemployment rate for Black and ethnic m nority workers was 6 9%, compared to 3 2% for white workers

Only half of LGBTQ+ workers feel comfortable being out at work

Only ha f of LGBTQ+ workers in the UK are comfortable being out about their sexual orientation with colleagues at work according to new research from Deloitte

Delo tte’s 2023 LGBT+ Inclusion @ Work report looks at the experiences of 5,474 LGBTQ+ people in the workp ace in multiple sectors across 13 countr es through the lens of sexual orientation and gender identity.

More than half of respondents (59%) think that allyship plays an important role in helping people be open about their LGBTQ+ identity at work

New review to boost employment prospects of autistic people

A new review designed to boost the employment prospects of autistic people has been launched by the Government to spread opportunity, close the employment gap and grow the economy

The Secretary of State for Work and Pensions, Mel Stride MP has appointed S r Robert Buckland KC MP to lead the review, wh ch w ll cons der how the Government can work with employers to help more autist c people realise their potential and get into work

Of FTSE 100 CEO's identifying as female or person of colour.

#3 Equity, diversity & inclusion in focus

Engineering culture in the UK is not inclusive enough according to the Royal Academy of Engineering

Engineering culture in the UK needs to accelerate its drive to become more inclusive, according to a new report from the Royal Academy of Engineering

The research commissioned by the Academy aimed to improve understanding of how engineers perceive the current culture of the engineering profession and whether it is attracting, developing and retaining the number and diversity of engineers needed in the UK.

From café worker to nuclear asset care, Freyja Ingham, Morson Projects

Freyja Ingham is Asset Care Team Manager at Morson Projects

Without much encouragement from her teachers to consider pursuing a career n STEM Freyja spent much of her early teenage l fe working in a local café, unsure of what to do. PathF nders speaks to her about her journey into engineering

I did STEM at GCSE kind of age and, you know, we went to the Big Bang Fair in Manchester and it was really good fun. But I guess I never considered it as a career path because my teachers never really pushed that.

Monetary Policy ReportMay 2023

The Bank of England's quarterly Monetary Policy Report sets out the economic analysis and inflation projections that the Monetary Policy Committee uses to make its interest rate decisions.

Inflation is too high. It has been around 10% since last summer.

In March prices were 10 1% higher than a year ago Inf ation has been around 10% since last summer well above the 2% target

Higher energy prices are one of the main reasons for this.

Russia’s nvasion of Ukraine led to large increases in the price of gas Households’ energy costs have almost doub ed s nce the start of ast year

Economic headlines

Businesses are charging more for their products because of the higher costs they face. There are ots of job vacancies as fewer people are seeking work fol owing the pandemic. That means that employers are hav ng to offer higher wages to attract job applicants Prices for services have risen marked y

The Bank of England have raised interest rates higher to make sure inflation falls

In total, they have ra sed our interest rate to 4 5% from 0 1% s nce December 2021 Higher interest rates make it more expensive for peop e to borrow money and encourage them to save That means that, overall, they w ll tend to spend less If peop e on the whole spend less on goods and services, prices will tend to rise more slowly That lowers the rate of inflation

Inflation is expected to fall quickly

To around 5% by the end of this year That doesn’t mean that pr ces will fall but they wil stop increasing so quickly.

Monthly GDP is estimated to have fallen by 0.1% in May following growth of 0.2% in April 2023.

Looking at the broader picture GDP has shown no growth in the three months to May 2023.

Production output fell by 0 6% in May 2023 after a fa l of 0 2% in April 2023, this sector was the main contributor to the fall in monthly GDP in May.

The construction sector fell by 0.2% in May 2023 fol owing a fall of 0 9% in April 2023, revised down from a fall of 0 6% in the prev ous publication

UK denies report of ready deal to rejoin EU's Horizon science scheme.

UK Prime Minister Rish Sunak's office den ed a BBC report that a deal for Britain to rejoin the European Union's Horizon scientific research scheme had been negotiated and was awa ting approva

No deal has been agreed upon and ta ks are ongoing Brita n ' s government said. The UK has been negotiat ng with the EU over rejoining Horizon after London and Brussels sett ed their d spute over post-Brex t trade rules governing Northern Ireland in February

Concluding thoughts

Dr Gareth Owen, Morson Market Analyst

Though the UK has much to be positive about in the first half of 2023, storm clouds are still on the horizon.

The UK continues to experience high inflation, but the medicine of higher interest rates could easily stall the economy and act as a drag on the journey out of the pandemic era.

Government appears to have lost focus on the key challenges the UK faces in growing the economy, as it is more concerned about short term measures to make quick impacts, before the next general election

The labour market remains very tight, with broad skills shortages, despite the supply of candidates across the job market having risen for four consecutive months. The continued inflationary pressures mean that more people will redouble their job search efforts and companies look to adapt their operations to battle against the challenges ahead.