Amidst a technical recession in the UK, the labour market remains remarkably resilient, with job security confidence reaching near-record highs and wages experiencing positive growth.
The latest findings from the Robert Half Jobs Confidence Index (JCI), produced in collaboration with the Centre for Economics and Business Research (Cebr), shed light on the surprising state of the job market in the face of economic challenges.
The JCI’s latest report reveals that despite the shallow recession in Q4 2023, a significant 56.1 percent of employees express confidence in their job security for the next six months.
This unprecedented optimism has propelled job security confidence to its second-highest level on record (138.4), highlighting the strong alignment of the economy and the labour market.
Unemployment remains at a low rate of 3.8 percent, a historical standard indicating the tenacity of the labour market, driven by persistent skills shortages and elevated vacancies compared to pre-pandemic levels.
What about real wage growth?
Real wage growth, a key factor contributing to employee confidence, has experienced positive momentum for the third consecutive quarter. The pay confidence pillar of the JCI rose by 8.3 points to 36.8, exceeding the long-run average. This trend is anticipated to fuel increased demands for higher wages among workers. However, concerns persist regarding wage growth and its potential impact on inflation, as the rate of input price inflation has recently reached its highest point since August 2023, partly due to rising salaries in the service sector.
Despite the recessionary backdrop, Robert Half suggests that the downturn may be shallower than expected and possibly already over. Recent data indicates that January’s inflation remained at a lower-than-expected 4 percent, coupled with an improvement in consumer confidence. This optimism aligns with the upbeat performance of Britain’s private sector, growing at its fastest rate in nine months.
Job security and better pay
Matt Weston, Senior Managing Director UK & Ireland at Robert Half, emphasised the significant confidence workers feel regarding their job security and ability to negotiate better pay. He noted the high mobility of employees in the tight labour market, driven by skills shortages across various sectors. Weston stated, “Wages are up, with real earnings growing for the third consecutive quarter,” attributing the trend to workers confidently leaving roles or striking, leading to pay rises or promotions for those remaining.
Weston also highlighted the impact of skills shortages on economic inactivity, leaving around 900,000 vacancies challenging to fill. He urged a multifaceted approach to address economic inactivity, emphasising support for individuals unable to work due to long-term sickness and strategies to make work more attractive, encouraging more people to rejoin the labour market.
As the UK experiences an economic revival, business leaders face the challenge of navigating persistent skills shortages and economic inactivity, maintaining a tight labour market likely to drive further wage growth.
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.
