'Brexit uncertainty' drags employer confidence to lowest level since referendum

31 Jan 2018 By Marianne Calnan

Lack of suitably qualified candidates significant challenge for UK businesses, says survey

The shortage of suitably qualified candidates for UK jobs has contributed to employer confidence dropping to its lowest level since the EU referendum, a report published today (31 January) has found.

Nearly a quarter of the 600 UK employers surveyed admitted that finding suitable employees for job vacancies was their most significant challenge. The proportion of employers that said they did not know their short-term hiring plans for temporary staff rose to 27 per cent, up from 9 per cent at the same point last year. 

The Recruitment and Employment Confederation (REC) and ComRes’ latest JobsOutlook survey of UK businesses between 24 November and 18 December 2017 revealed that employer confidence had hit a net balance of -14.

Employer confidence was down 40 points – the lowest since the EU referendum on 23 June 2016. The net balance of hiring and investment decisions also fell, by two points to nine over the same period. 

 Lack of skills or experience within organisations was cited as a challenge by 12 per cent of those surveyed. There was also a steep decline in the number of employers offering temporary staff permanent status, from 16 per cent in January 2017 to just 5 per cent this month.

However, the survey found the main challenge to businesses was political and economic uncertainty, with more than a third giving this as a reason. A slightly higher proportion said they believed Britain’s economic conditions were worsening.

Employers in the engineering and technical, health and social care, and construction industries were most likely to expect a shortage of staff for their permanent roles for the sixth consecutive month running.

London-based employers had the strongest reaction to uncertainty, with close to half unsure about how many temporary workers they would take on in their organisation during the next three months. 

As People Management reported, employers feared organisations in the City could shed 10,500 jobs on the first day of Brexit, including back-office and client-facing roles spanning banks, insurance companies and asset managers, according to EY findings published in December 2017.

Tom Hadley, REC director of policy, said employers’ increased awareness of the potential impact of Brexit on recruiting talent had played a large part in their declining confidence. 

He then suggested that political and economic uncertainty should be seen as opportunities at least for employers and HR. “This could lead to a step-change in diversity and inclusion schemes and job design… HR has an opportunity to show its worth and provide the solutions employers are looking for,” he told People Management

“Recruitment is hard and will probably get harder, but this means people issues are creeping up the corporate agenda” and employers will need to look ahead “to innovate”.

For some employees, the uncertainty could lead to a boost in pay packets, as employers attempt to attract and retain talent. Stephen Clarke, senior economic analyst at the Resolution Foundation, said: “The tough decisions employers have to make around recruiting and retaining employees could lead to wages starting to pick up.”

Nick Kirk, PageGroup’s regional managing director, agreed there was uncertainty in the labour market, but denied that this would necessarily lead to employer confidence in recruitment deteriorating: “If a good candidate is coming on to the market, they can be pretty confident of getting a number of interviews, at least one offer and their current employer trying to buy them back with a pay rise.”

However, Lee Biggins, founder and managing director of CV-Library, said Britain’s “challenging” economy is negatively affecting the job market – and the confidence of both employee and employer in finding and filling roles. “Employers are struggling to find the right candidates because [employees] themselves are nervous about moving jobs,” he said.

Experts told the government’s Migration Advisory Committee in October 2017 that EU immigration helps to create jobs, rather than take them from British citizens. The government was urged to avoid post-Brexit immigration policies that would cut the flow of immigration to universities, businesses and the public sector.

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