Organisations remain positive about recruitment, despite falling business confidence

Hiring intentions for both permanent and temporary staff remain strong, despite broader business confidence waning in the wake of the EU referendum, according to a new report.

The figures, published by the Recruitment & Employment Confederation (REC), appear to confound expectations, and suggest that business growth – coupled with a lack of current capacity – is behind the drive to recruit.

Of the organisations surveyed for the report, in the three months to August, 34 per cent said they had no capacity to take on more work without hiring additional staff, while 43 per cent said they had only a small amount of capacity.

Almost a quarter (22 per cent) were planning to take on permanent staff over the next three months, compared with 9 per cent that were looking to increase the number of temporary staff over the same period.

Micro and small businesses were most likely to increase both their permanent and temporary headcount over the next quarter.

Kevin Green, chief executive of REC, said the research showed the fundamentals of the UK jobs market were strong, with record employment levels: “Thanks to a resilient, business-as-usual attitude from consumers since the referendum, demand on businesses has remained buoyant, and this is reflected in employers saying they will actively expand their workforces in the coming months.”

However, he said there were question marks around the sustainability of the positive trends seen in the months since the vote. “Skills shortages are a major problem in many sectors – one that will only get worse if the supply of skilled EU workers is in any way curtailed,” he said.

According to the report, business confidence has weakened month-on-month since the EU referendum, with 22 per cent believing that economic conditions were getting worse in July, compared to 34 per cent in August.

Green said: “We hope that fiscal stimulus will be top of the agenda in the chancellor’s Autumn Statement. That, coupled with an immigration policy designed to help businesses thrive, will improve confidence and bolster the success we have seen so far.”  

Longer-term hiring intentions revealed similar trends, with 25 per cent planning to take on more permanent staff over the next four to 12 months, and 13 per cent planning to take on more temporary staff.

Successive studies have failed to agree on how the EU referendum has actually affected both the short and long-term recruitment markets. But it may be significant that hiring for ‘gig economy’ jobs has increased 14 per cent since May, according to a new measure.

The new Online Labour Index – designed to provide an online labour market equivalent of conventional labour market statistics – tracks job vacancies listed on sites such as Freelancer and PeoplePerHour, with growth in the UK faster than the rest of Europe and the US.

By contrast, the financial sector – which tends towards permanent, higher-paid roles – saw a 10 per cent drop in live postings in July and August, compared with May and June, according to data from the Institute for Public Policy Research (IPPR).

Clare McNeil, associate director for work and families at the IPPR, said: “This new data shows the immediate impact that the vote to leave the European Union appears to be having on the finance sector.”

She called on the prime minister to end doubts around whether the government will pursue access to the single market and make ‘passporting rights’ for financial institutions a priority in the Brexit negotiations.