UK employers concerned for future of the post Brexit economy despite booming jobs market

Employer confidence in the UK economy has moved into negative territory, according to the latest JobsOutlook survey by the Recruitment & Employment Confederation (REC). The net balance fell from +6 per cent last month to -3 per cent in the latest report, as 31 per cent of employers now expect the economy to worsen and just 28 per cent expect it to improve.  Employers are still looking to hire, with one in five (19 per cent) planning to increase permanent headcount in the next three months.  Confidence in making hiring and investment decisions remains positive with a net balance of 10 per cent, but is at its lowest for the past year.  In addition to signs of deteriorating employer confidence, consumers are also becoming more pessimistic. The GfK’s index of consumer confidence fell to -12, equalling last year’s post-referendum low.

The latest JobsOutlook survey of 601 employers also claims:

  • 40 per cent of employers have no spare capacity and would need to recruit to meet additional demand
  • more employers express concerns about a lack of appropriate candidates for construction jobs (both temporary and permanent) than any other area.

REC chief executive Kevin Green says: “The jobs market continues to do well despite growing uncertainty. However, this drop in employer confidence should raise a red flag. Businesses are continuing to hire to meet demand, but issues like access to labour, Brexit negotiations and political uncertainty are creating nervousness. Employers in the construction sector are especially concerned as they rely heavily on EU workers to meet the growing demand for housing and to support the government’s infrastructure plans. The added factor of dropping consumer confidence is putting some businesses on edge. If people reduce their spending, businesses will be impacted. The government must do more to create an environment where businesses have clarity. That means clearly laying out what Brexit plans look like and how employers can keep recruiting the people they need from the EU. The jobs market is in a good place but employers will only continue to hire and invest if they feel assured about the future.”

Commenting on the latest REC JobsOutlook survey, David Willett, Director at The Open University, said: ”UK employers are faced with a chronic skills shortage, partly exacerbated by the uncertainties surrounding Brexit, which is why employers need to start looking at recruitment and staff development differently. It is now more important than ever that organisations invest in their workforce, to build up the skills they need, rather than buying them in from elsewhere, which can be costly and time consuming. Many organisations report that the situation is deteriorating, with a shortfall in the skills required to develop the agility needed to embrace and adapt to changes in a shifting political, technological and economic climate. Looking forward, it must become a business priority to build skills and capabilities through investing in work-based training for staff at all levels and ages.”

Recently commissioned research for The Open University’s Business Barometer claims:

  • The skills gap is costing UK businesses more than £2 billion a year in higher salaries, recruitment costs and temporary staffing
  • 90 per cent of employers have struggled to recruit workers with the right skills in the last 12 months
  • The recruitment process is taking longer than expects for three quarters (75%) of employers, which means many will have incurred additional costs in recruitment fees and hiring temporary staff, estimated to be at least £1.7 billion
  • More than half (56%) of businesses had to increase the salary on offer for a role well above the market rate to get the skills they required in the last 12 months
  • 47 per cent of employers are struggling to find candidates with the required IT skills, and 43 per cent are struggling to attract talent with the right management skills.