JobsOutlook: Employers turn to temps amid economic uncertainty

Employers continue to turn to temporary staff to fill jobs in the face of economic uncertainty and labour shortages, according to new Recruitment & Employment Confederation (REC) data.

In the fourth quarter of 2022, employers’ confidence in both the UK economy and their ability to invest in their business remained low, falling from -67 and -27 in July-September to -68 and -30 in October-December 2022. Both measures continue to surpass the previous pandemic-related record lows in June 2020 (-57 on the economic outlook and -13 on investment intentions).

Despite the drop in confidence, the immediate outlook for hiring remains positive for both permanent and temporary workers. Anticipated demand for temporary agency workers continued to rise – improving by 1%, quarter-on-quarter, to +7 over the next three months, and 4% to +8 in the next four to 12 months. Employers report that hiring intentions for permanent staff were +11 over the next three months, down by 6%, and +15 over the next four to 12 months, down by 3%.

Neil Carberry, Chief Executive of the REC, said:

“Today’s data shows that businesses remain concerned by the economic outlook. That is no surprise, given high inflation and global economic and political uncertainty. But hiring intentions show that firms still need new staff and they also suggest that a recovery in confidence could be quite quick if inflation falls.

"In the face of high levels of uncertainty and labour shortages, it is no surprise that temporary workers are playing a bigger role in companies’ plans. Our world-leading temporary work market remains vital to many companies. On any given day there are 1.2 million people who are working via a recruitment business on a contract or temporary assignment. Governments can help realise their potential by freeing up more of employers’ money to train and develop them by reforming the Apprenticeship Levy. Businesses across sectors are calling for this reform which will help with the labour and skills shortages that are currently holding back economic growth to the tune of around £39 billion a year according to REC research.“

Other statistics from today’s report showed:

• In December 2022, 65% of surveyed employers reported that a lack of government support is one of the greatest barriers to creating a ‘green industrial revolution’ in the UK. More than half (55%) of respondents also believe that the UK workforce lacks the ‘green skills’ needed to fulfil the ‘green job’ requirements.

Ends

Notes to editors:

JobsOutlook is produced by the REC in partnership with Savanta ComRes. Savanta ComRes interviewed 602 UK employers involved in hiring by telephone between 3 October 2022 and 23 December 2022. 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.

Economic modelling for the REC published in July 2022 found that with a 10% spike in demand in the economy, and the labour market restricted by shortages, the UK economy would shrink by between 1.2% and 1.6% by 2027, relative to where it would be without these shortages. This could cost the economy anywhere between £30 billion and £39 billion every year – equivalent to losing almost the entire current defence budget or two Elizabeth Lines annually. For more read REC’s Overcoming shortages – How to create a sustainable labour market – July 2022.

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.

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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.