The UK Net Employment Outlook has fallen to +25 percent for Q4.
This is a decline of 8 percent on Q3, and a decrease of six percent year-on-year according to the latest ManpowerGroup Employment Outlook Survey (MEOS).
Whilst hiring confidence remains positive across all sectors, new candidates are faced with less bargaining power as employers prioritise retaining their existing workforce.
The survey is based on responses from 2,030 UK employers and asks if they intend to hire additional workers, maintain current headcount, or reduce the size of their workforce in the coming quarter (October to December 2022).
It is the most comprehensive, forward-looking employment survey of its kind and is used as a key economic indicator by both the Bank of England and the UK Government.
Employees still hold the power
“Employers are keen to get people back into the office, however employees still have a lot of bargaining power,” says Chris Gray, Director at ManpowerGroup UK. “Over the last 12 months we have seen employers offer unprecedented benefits, from hefty signing bonuses to fully remote working, in order to attract skilled candidates. However, as demand for new workers cools, candidates are less able to secure these benefits – but many existing employees don’t want to give them up. One of our clients saw 75 percent of employees decline new contracts that didn’t guarantee remote work. This leaves employers engaged in a balancing act of keeping their existing employees happy while phasing out remote work for new candidates.
“We’re seeing a shift from candidates holding all the cards to employers now having the leverage to ask candidates to come into the office – at least some of the time. Existing employees are more likely to have the bargaining power to retain their home working benefits, but new candidates will increasingly see pandemic-era benefit offers in the rear-view mirror.”
What about the banking, finance, insurance and real estate sector?
The Banking, Finance, Insurance, and Real Estate sector leads the pack with a Net Employment Outlook of +40 percent, a decline of nine percentage-points on Q3 and nine percentage-points year-on-year. This is the second consecutive quarter the Banking, Finance, Insurance and Real Estate sector has recorded the strongest employment Outlook in the UK.
Gray explains: “Across the UK we are seeing a decline in hiring Outlook, but our data shows this is mainly driven by a shift from making new hires to retaining existing employees, rather than an uptick in layoffs. This is especially true in the Banking, Finance, and Insurance sector, which has recorded a one-third increase in employee retention plans and no increase in layoffs. This is a trend we’re seeing across nearly all sectors and is evidence that despite employers trying to phase out working from home, employees are being retained – a sign employee bargaining power remains strong.”
Londoners are least likely to work in the office full-time
Employers in London report an Outlook of +28 percent for Q4, a decline of 13 percentage-points since last quarter. In Q1, the data showed that London was the region least likely for employers to ask employees to work in the office full-time. Empty office space in London has increased by 51 percent since the start of the pandemic, indicating that working from home continues to be popular despite increases in the cost of living making working from home more expensive.
Gray continues: “As remote work grew in popularity during the pandemic, we saw more and more people move away from big cities such as London and adjust to life without a daily commute. Meanwhile, employees who remain within commuting distance are reluctant to return to the office full-time and our data shows they have the bargaining power to hold on to these benefits. However, new contracts increasingly require candidates to be within commutable distance of the office and commit to coming into the office at least one day per week – with the possibility of that number going up in future.”
“As household energy bills hit record levels, trends may shift slightly with existing employees keeping their options open where possible to maintain their bargaining power. Decisions on whether to go back into the office will be based on individual circumstances. This is especially true for employees who moved away from big cities where commuting is most costly.”
Gray concludes: “Despite the shift in power from candidates to employers, the fight for talent is still firmly underway, and employers need to meet candidates half-way to attract the best talent. That means offering sustainable benefits like increased annual leave and flexible working arrangements alongside increases in pay.”
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
