Brexit uncertainty hits hiring of permanent staff, figures suggest

Companies are holding off from hiring more permanent staff and taking on more temporary workers, in the wake of new figures that suggest uncertainty over the outcome of June’s EU referendum.

Surveys are suggesting, with opinion polls tight, that companies are delaying hiring and investment decisions until after the 23 June vote on Britain’s membership of the EU. Employees are also becoming more hesitant to move jobs, as they prefer to stay put until the referendum decision draws to a conclusion.  

The number of people placed in permanent jobs continued to increase during March but at the slowest pace for six months, according to a survey of recruitment companies. At the same time, the hiring of temporary and contract staff rose at the sharpest pace for four months, according to the poll by Markit and the Recruitment and Employment Confederation (REC).

The REC’s director of policy, Tom Hadley, said:

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“While we expect jobs growth to continue overall, we are now seeing the effects of current uncertainty in the marketplace on UK employment.

Global economic headwinds plus uncertainty around a possible Brexit make it likely that slower growth in permanent hiring will remain over the next few months as employers take a wait-and-see approach. In contrast, temporary hiring is on the up as businesses seek to meet increasing demand while retaining the ability to react quickly to any threats that might be around the corner.”

REC’s survey of 400 UK recruitment consultancies also pointed to softer growth in demand for staff. The latest increase in vacancy numbers was the weakest for 33 months.

Official data shows pay growth has been slow in the UK in recent months despite record employment. REC said that salary growth was probably driven by the “national living wage”, which came into force this month and requires employers to pay all workers 25 and over at least £7.20 an hour, an increase on the previous figures of £6.70.

Futhermore, findings from CEB’s Global Talent Monitor shows that as intent to stay increased throughout Q4, active job-seeking activity has declined, with over half of UK workers (52 percent) taking a passive approach to job hunting, making it increasingly difficult for recruitment teams to source and place new candidates.

Commenting on the findings, Brian Kropp, HR Practice Leader at CEB, said:

“High intent to stay combined with job dissatisfaction means the UK is at risk of becoming a nation of inactive and uninspired workers. Currently many people are choosing to stay with their current employer due to political uncertainty and general market volatility, preferring the stability they offer rather than feeling engaged in their day-to-day work. Companies would be well-advised not to make promises of stability that they ultimately won’t be able to keep. This can drive down employee commitment by as much as 17 percent. Organisations should instead set realistic expectations for stability and focus more on differentiating their Employment Value Proposition around elements they can control.”