JobsOutlook: Chancellor should take advantage of mood for investing and hiring in his spring Budget - REC

Government has a chance to unlock employers’ confidence about their own business, by tackling the doubts about the wider economy that are slowing down decisions.

The Recruitment and Employment Confederation’s latest JobsOutlook reports that businesses’ mood about their own prospects continues to improve.  While the net balance of employers’ confidence in making investment and hiring decisions was +4 in October-December – optimism growing more slowly than in previous months – it is hugely important that firms continue to see the future as hopeful.

But firms across the country report longer decision-making timelines and greater caution about action driven by concern about the wider economy. Employer sentiment on this remains strongly negative (-43, down 4 points). Changing this is the biggest single boost to growth the Chancellor could deliver.

Overall activity in the labour market looks set to remain robust if not strong. Employers’ sentiment towards short-term (next three months) permanent hiring was strong this October-December 2023 quarter (at net: +16) – especially among medium-size businesses. And medium-term (four to 12 months) permanent hiring intentions also remained strong in this quarter (at net: +23). On the temp side, the balance remained positive (net: +2) for the short term, although medium-term planned demand for agency workers turned marginally negative (net: -1). Given the scale of the growth of the temp market since 2020, some flattening off in 2023 was always likely.

Neil Carberry, Chief Executive of the REC, said:

“Firms believe in themselves – but they need reasons to believe in the path of our wider economy. At the Budget, the Chancellor has a huge opportunity to encourage companies to turn on the investment taps. Finally committing to radical skills reform, including the failed apprenticeship levy, reforming tax and regulation to support flexible workers, and investing in infrastructure that drives growth and helps people into work will all be vital. There are billions of pounds of extra growth and prosperity in getting things right now – we don’t need to wait for an election.

“Right now, our labour market and the economy are in a bit of a stand-off. The jobs market has been remarkably robust – with three years of strong growth in temporary work helping to keep employment high as firms react to their new competitive and technological environment. That permanent roles are strong in this data suggests that anecdotal feedback from REC members that the market has found the bottom of its contraction is valid. It is no surprise that temp volumes are flatter – this market has grown almost continuously for the last four years.”

Ends

Notes to editors:

1.     JobsOutlook is produced by the REC in partnership with Savanta ComRes. Savanta ComRes interviewed 501 UK employers involved in hiring by telephone between 21^st September and 19^th December 2023. Data were weighted to be representative of UK adults in employment by region, broad industry sector and public/private split. Savanta ComRes is a member of the British Polling Council and abides by its rules. Data tables are available at www.comresglobal.com.

2.     REC has recently published its Dynamic Labour Markets for Growth because no attempt to drive growth will succeed without a proper appreciation of workforce issues. Our proposals cover:

·       Understanding today’s people and labour market challenges.

·       Supporting our labour market transition by preparing for the future.

·       Boosting workforce productivity and driving down inactivity.

·       Regulating for a sustainable and dynamic labour market.

Click here to view all REC press releases and for more information and interview enquiries, contact the REC Press Office on 020 7009 2157, 020 7009 2129 or pressoffice@rec.uk.com. Outside of regular office hours, please call 07702 568 829.

The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for great candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy.

Find out more about the Recruitment & Employment Confederation at www.rec.uk.com