From education to employment

Record low employer confidence in UK economy


New data from the Recruitment and Employment Confederation (REC) shows employers’ confidence in the prospects for the UK economy fell by 6 percentage points last month to a net: -20. This is the lowest on record in the three years the JobsOutlook survey has measured sentiment about the economy amongst Britain’s businesses.

While not new, the weakening trend seen in today’s survey appears to be affecting hiring decisions in respondents’ own firms. Employers’ confidence in making hiring and investment decisions declined by 3 percentage points from the previous month to net: +5, the lowest level recorded since June 2016.

Neil Carberry, Recruitment & Employment Confederation chief executive says:

“With only a month before Britain is due to leave the EU, businesses across the country are clear that they need clarity about the plan for after the end of March. That must mean a smooth move to a Brexit deal – not a dangerous no deal experiment. A sensible approach will underpin strong growth in jobs, which UK employers have a record of delivering, including in the survey we publish today.”

“Recruiters are helping employers to find the staff they need – especially in key sectors of shortage, like engineering, healthcare and hospitality. But with employers’ confidence levels at a low point and hiring intentions for both permanent and temporary staff dropping in today’s survey, there can no longer be any argument – uncertainty is damaging for job creation.”

Survey data shows weakening growth across the labour market – with contractions in some areas

Alongside the fall in confidence in making hiring decisions, forecast demand for permanent employees in the short-term fell by 4 percentage points to net: +17, and in the medium-term fell by 6 percentage points to net: +25, compared with the previous month. That said these figures are still 3 and 9 percentage points higher, respectively, than in the same period last year.  

Half (50 per cent) of UK employers who hire permanent staff expressed their concern this quarter over the sufficient availability of candidates for permanent jobs, 9 percentage points higher than a year earlier, with anticipated shortages of Engineering & Technical workers causing most anxiety for employers. Health & Social Care and Hospitality were the other two occupational sectors where employers expect the severest skills shortages. These three sectors have been causing most concerns for employers for the last five months.

In the short-term, the balance of employer sentiment to hire agency workers on a temporary basis fell by 9 percentage points from the previous month to net: -6, returning to negative territory for the first time since November 2017.

In the medium-term, the balance of employer sentiment towards agency worker hiring on a temporary basis dropped 6 percentage points from the previous month to net: -7, remaining in negative territory for a second successive month. This was 10 percentage points lower than in the same period last year, the lowest since records began in June 2016.

Following this quarter’s decline in anticipated demand for temporary workers, 25 per cent of employers intending to hire temporary workers expressed concern over the sufficient number of agency workers with the necessary skills they require, down from 32 per cent a year earlier. Employers are expecting the most severe skills shortages among Sales & Retail workers, followed by the Education and Engineering & Technical sectors. With the academic year in full swing, the return of concern over sufficient availability of agency workers in the education sector is noteworthy.

82 per cent of UK employers have either little or no surplus workforce capacity, including 88 per cent of the UK’s largest (250+ employees) enterprises and 93 per cent of public sector bodies.

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