Labour market remains strong despite Brexit uncertainty, figures show

But experts warn there are still reasons to worry as firms remain ‘frustrated’ with a lack of resolution

Employer hiring intentions have remained positive despite recent uncertainty, latest figures show, with expected demand for permanent employees increasing in the three months to the end of August in spite of continued doubt around Brexit.

The latest JobsOutlook by the Recruitment & Employment Confederation (REC) showed short-term demand to fill permanent posts increased 5 percentage points compared to the three months to the end of March, reaching +21 on the REC’s index.

This means the proportion of employers expecting an increase in permanent workers over the next three months was 21 percentage points higher than those expecting a decrease.

The medium-term demand for permanent employees – looking at the next four to 12 months – increased 7 percentage points to +25.

This was despite an overall drop in business confidence, which fell 4 percentage points to -30 on the REC’s index.

Jon Boys, CIPD labour market economist, said the results suggested that, despite recent political and economical uncertainty, there had been no big hits to employment in the short term. “They really just continue the trend [of official labour market data] which is employment’s really strong, we’re not yet at a downturn,” he said.

But Boys added that although there were no big hits to employment, there was still reason to worry. “The overarching story is that recruitment is a fairly short-term thing compared to something that would really show you businesses were confident, such as really long-term capital investment, and that’s because of Brexit uncertainty,” he said.

The REC’s outlook also showed that short-term demand for agency workers had increased by 12 percentage points over the same time period, and that three-quarters (75 per cent) of employers reported little or no surplus workforce capacity – increasing to 85 per cent in the public sector.

Just under half (49 per cent) of employers of permanent staff expressed concerns about the sufficient availability of candidates for hire, with the health and social care, engineering and technical, and construction sectors of most concern.

Neil Carberry, chief executive of the REC, said the figures emphasised why businesses were “frustrated at the lack of a smooth and stable resolution” to Brexit.

“There is growth to pursue and there are jobs to create – businesses believe in themselves and are ready to go. But the unstable economic outlook continues to put a dampener on their ambitions,” he said. 

“Attracting workers to the UK to fill critical shortages and making sure they feel welcome, speeding [up] investment decisions that create jobs and investing in skills development for all workers are critical to our future success. It’s time to get back onto this agenda.”