Recruiter confidence plummets to record low amid Brexit inertia

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Negotiation of Great Britain and European Union (Brexit). Statesman or politicians with clasped hands.

Recruiter confidence plummets to record low amid Brexit inertia

The Recruitment and Employment Confederation (REC)’s monthly survey of hiring intentions, JobsOutlook, has shown that hirers’ confidence has plummeted for the second month in a row to its lowest level since the survey began measuring sentiment about the economy amongst Britain’s businesses three years ago.

Confidence dropped eight percentage points in February to a net -28, 54 percentage points lower than in June 2016.  However, sentiment for hiring contractors remained fairly static, only dropping one percentage point in both the short- and medium-terms, to -8 and -7 respectively.

JobsOutlook is compiled by the REC in partnership with ComRes from data collected over 600 telephone interviews with Britain’s top hirers and employers.

The economy has held up remarkably well to the Brexit paralysis in Westminster, but it seems the lack of certainty is now starting to bite, affecting hiring decisions in JobsOutlook respondents’ own firms.  Employers’ confidence in making hiring and investment decisions declined by six percentage points from the previous month’s record low to a net -1, the first time this measure has dropped into negative territory since the survey started in 2016.

The health of the recruitment sector is seen by many as a barometer for the economy as a whole.

Despite the nosediving confidence, demand for permies remains high in some areas – especially where there are skills shortages.  More employers planned to increase, rather than decrease their permanent headcount in the short-term, a net score of +17.  Over the medium-term, forecasts for permanent hiring fell three percentage points this month, but remained positive at net: +22.

The reluctance to make key investment decisions caused by the ongoing economic and political uncertainty continues to bolster demand for contractors, with half of hirers highlighting using agency workers to manage uncertainty (47 per cent) and access to short-term skills (51 per cent) as important reasons to use temporary agency workers.

83 per cent of employers cited the geographical and/or skills-sourcing expertise of an agency was an important factor in selecting recruitment agency partners.

Neil Carberry, chief executive of the Recruitment & Employment Confederation, said: “A year of falling business investment and weeks of Brexit inertia mean no-one should be surprised that employers’ confidence in hiring for their own business is now dropping.  For months, businesses have told us that they were concerned about the general outlook for the economy – it is clear to us that this concern is now closer to home.  Lower use of temporary labour is a sign of lower demand.

“But our jobs market is robust.  Even now, recruiters are finding people new jobs and helping companies to compete.  The fact that permanent hiring plans are still positive is a sign that the economy will deliver, if the fog of uncertainty is lifted from British business.

“The extension to the Brexit deadline gives us some space to find a pragmatic deal that will give the UK’s businesses the certainty they need to invest and create jobs.  And it avoids a no deal, which the majority of recruiters – in line with the majority of all British businesses – see as deeply problematic for the economy and the jobs market.

“But we cannot delay forever.  It is in politicians’ power to make the weaker data we see today a blip.  Our labour market is strong.  Giving firms certainty about a future deal that supports trade, jobs and investment would get the UK back on track.”

Other statistics from this month’s JobsOutlook include:

  • Half (49 per cent) of UK employers expressed concern about the availability of permanent candidates, with a lack of Engineering & Technical and Health & Social Care workers continuing to cause most concern.

 

  • Following this quarter’s decline in anticipated demand for temporary workers, 35 per cent of employers intending to hire temporary workers expressed concern over the sufficient number of agency workers with the necessary skills they require. This is the same proportion as a year earlier.  Employers are expecting the most severe skills shortages among Construction workers, followed by Education workers and Drivers.

 

  • Four in five employers (82 per cent) had either no surplus workforce capacity, or such a small amount that they may need to hire more staff if demand increased.

Figures released by the Office of National Statistics in March continue to show that UK employment levels are the highest they have been since records began in 1971, an estimated 76.1 per cent for the period November to January.  Unemployment is at 3.9 per cent, the lowest level since January 1975.

1st April 2019.

Sources:

https://www.rec.uk.com/news-and-policy/press-releases/employer-confidence-plunges-as-uncertainty-over-brexit-bites

https://www.recruiter.co.uk/news/2019/03/no-surprise-hiring-sentiment-down-reveals-jobsoutlook-survey

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/march2019

https://www.gov.uk/government/news/employment-hits-highest-rate-since-records-began