Employer confidence continues to decline amid economic uncertainty

But report finds businesses still have ‘ambitious’ hiring plans as many lack surplus workforce capacity

Employer confidence in the UK economy has continued to drop, new figures have shown, despite businesses still holding strong hiring intentions.

The latest JobsOutlook report by the Recruitment & Employment Confederation (REC) found that more employers felt economic conditions in the UK were worsening than improving. Of the 600 businesses polled, 49 per cent said conditions were getting worse and just 18 per cent felt they were getting better.

This put the REC’s confidence index at -31: a level it has only reached once before in 2016.

Despite this, the report said employers had “ambitious” recruitment plans, with the REC’s index for short-term hiring intentions increasing to +24 per cent for permanent staff and +10 for temporary agency workers.

This means the proportion of employers expecting an increase in permanent workers over the next three months is 24 percentage points higher than those expecting a decrease.

Neil Carberry, chief executive of the REC, blamed low levels of business confidence on political indecision around Brexit. “Companies are ready to hire, invest and grow – but the lack of a clear path ahead means that more and more are thinking twice,” he said.

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“Whether it is Brexit or the spill over from Trump’s trade war, politicians need to prioritise jobs and growth over ideology.” 

The report also found that three-quarters (74 per cent) of the businesses polled had little or no surplus workforce capacity – rising to 82 per cent for companies with more than 250 employees – and that more than half (52 per cent) of businesses were concerned about the availability of permanent staff for hire.

A report earlier this month by the REC and KPMG showed that the number of people placed into permanent employment in the UK had declined for the seventh consecutive month in September – a decline it attributed mostly to Brexit uncertainty – and that businesses were scaling back recruitment plans because of the risk of a no-deal exit.

Jonathan Boys, labour market economist at the CIPD, said it was not unusual to see businesses take a “sit and wait” approach at times of uncertainty, adding that while employers should keep an eye out for policy changes, major changes such as updates to immigration policies would likely come with plenty of warning.

“Largely, employers have followed a ‘business as usual’ approach because they still need to do things and hire people,” said Boys.

The latest figures in the JobsOutlook, collected between July and the end of September, are too early to tell whether the latest Brexit extension or the calling of a general election has impacted on hiring intentions.