Employers’ hiring confidence improves for the first time since lockdown

24 Jul 2020 By Francis Churchill

But REC warns expectations for the wider economy are still low as experts say vacancies still lag ‘substantially’ behind pre-Covid levels

Employers’ hiring confidence has improved for the first time since February as lockdown measures are eased, according to a poll of businesses.

The latest JobsOutlook survey from the Recruitment and Employment Confederation (REC) found that the majority of 200 businesses polled were positive about hiring and investment decisions for the first time since lockdown.

Of the employers polled, 32 per cent said they expected their organisation’s confidence in hiring to improve, compared to 28 per cent who expected it to worsen.

This put the REC’s hiring confidence score –  which subtracts the percentage of businesses that are not confident about making hiring and investment decisions from the percentage that are – reached +4 in the first half of July, up from -9 in June, indicating that, on balance, hiring outlook had improved.

Similarly, forecasted demand for permanent staff over the next three months also increased, with the proportion of respondents indicating they planned to hire increasing to +14 in July, up from +6 in June. Medium-term demand, measured over the next four to 12 months, remained steady at +15.

However, employers’ confidence in the wider economy, while improving, still remained negative. Of the businesses polled, 60 per cent said they expected economic conditions to worsen, compared to just 21 per cent who said they thought conditions would improve. This put the REC’s economic confidence measure, which subtracts the percentage of respondents that held a negative outlook from those with a positive outlook, at -40: a slight increase of -46 the previous month.

The survey also found one in six (17 per cent) respondents had made redundancies in the year to July – up from 9 per cent in in the year to June.

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Commenting on the results, Gerwyn Davies, senior labour market adviser at the CIPD, said it was no surprise to see a modest rise in hiring as the economy makes “tentative steps” towards a recovery. But, he said: “The number of vacancies is continuing to lag substantially behind pre-Covid levels, especially in sectors such as hospitality and tourism, which are still suffering from the ripple effects of the pandemic shock.

“It is therefore inevitable that the overall jobs market will continue to shrink in the short term as the number of employers planning to make redundancies will continue to exceed the number of employers planning to hire.”

The REC’s latest outlook follows research from the British Chamber of Commerce, which indicated employers were still operating at half their pre-lockdown capacity, and that only a third of businesses furloughing staff were doing so on a part-time basis since the introduction of the flexible furlough scheme – with the majority of employers keeping staff on full-time furlough.

Neil Carberry, chief executive of the REC, said it was good to see employers' confidence rising as the government eased lockdown measures. “Even at times like these, there are always opportunities out there for jobseekers,” he said.

But, Carberry added, businesses were still worried about the overall economic outlook with many having to make “tough decisions” about redundancies. “It’s too early to tell how quickly the economy will recover, but there are steps the government can take to keep firms hiring and boost growth,” he said, calling for a more flexible skills system and a reduction in payroll tax and national insurance to reduce the cost of hiring.

“Equally, it’s vital that we secure a good Brexit trade deal and deliver a workable immigration system on time to build up confidence and business investment here in the UK,” said Carberry.

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