Stuart Gentle Publisher at Onrec

Employer confidence in UK economy falls amid Omicron uncertainty

Business confidence in the UK economy fell by nine percentage points to a net: -6, according to the Recruitment & Employment Confederation (REC)’s latest JobsOutlook survey.

This was the first time the barometer fell into negative territory since February-April 2021, indicating that confidence is dropping. It comes as uncertainty around rising inflation, labour shortages and the Omicron variant has increased over the past three months.

Business confidence in making hiring and investment decisions continued to improve, however, with a higher proportion of firms saying their prospects were still improving. However, that growth in confidence weakened slightly, falling by two percentage points to net: +11.

Kate Shoesmith, Deputy CEO of the REC, said:

“Labour shortages and worries about rising inflation have been weighing on employers’ minds for a while now. With the Omicron variant added into that mix, it’s no surprise to see business confidence in the economy falling slightly. The good news is that firms remain confident in their own prospects as we head into the festive period, however.

“While the next few weeks are likely to be bumpy, we anticipate a highly competitive labour market in early 2022. There will be particularly high demand for temporary work, which helps businesses to manage uncertainty and keep people in work during tough times. Firms will have to look seriously at their recruitment process and their offer to candidates to attract the staff they need. Recruiters are ideally positioned to help with this.

“We don’t know how much Omicron will affect the jobs market yet. Government support schemes were successful at protecting jobs and businesses in 2020. The hospitality sector in particular is already being impacted at its busiest time of the year, so it’s good to see the Chancellor announcing support funds for the sector. Businesses now need certainty and clarity from government on any future restrictions so they can plan ahead. This would also help to reassure consumers.”

With uncertainty around the UK economy increasing, demand for temporary workers in the next three months increased notably to net: +15. Demand for the next 4-12 months also rose by nine points to net: +14. Temporary work is a valuable resource for both businesses and workers during uncertain times, helping to manage peaks and troughs in business demand and keep people in work.

Hiring intentions for permanent staff remained robust at net: +21, both in the short term and in the medium term.

The survey also found that in November, roughly one month after the end of the furlough scheme, the majority of employers (51%) had seen no change in the availability of candidates for vacancies. However, slightly more employers (19%) experienced a reduction in the number of appropriate candidates than experienced an increase (12%).