Business confidence has fallen between July and September 2021, weakening in light of winter uncertainties.
According to the Recruitment & Employment Confederation (REC)’s latest report, business confidence in hiring fell to net +21 in July-September, having reached a record high of net +33 in April-June.
The report details that this represents the third straight month of weakening business confidence and comes amid winter uncertainties including rising inflation, labour shortages and the increasing spread of COVID-19.
During this three month period, while demand for permanent staff remained high, hiring intentions for temporary staff fell.
For the next three months, this fell by nine percentage points to net +8, while demand for the next 4-12 months decreased by seven points to net+3.
However, the desire for permanent staff remained very high at net+24 in the short term and net+28 in the medium term.
In the three months until September, labour shortages continued with half of UK employers experiencing them (50 per cent).
Of these, more than half (55 per cent) said they thought that offering higher starting salaries for new recruits would help to address this problem, while over a third (37 per cent) believed improving other in-work benefits, like flexible working, would help.
Similarly, business confidence in the UK economy remained largely positive but did see a fall of four percentage points to net+16.
Neil Carberry, Chief Executive of the REC, said:
We have seen sky-high demand in the labour market for months now, with businesses rushing to hire new staff as they re-opened and re-shaped to meet customers’ changing needs. That initial bounce-back was always going to pass, and this survey shows this is starting to happen.
A slowdown of pace is not unexpected, or reason to panic – but it underlines how vital it is that government and business work together on policies that will help soften the landing and level up the UK economy. In today’s Budget, the Chancellor should look to boost employment, pay and the public finances by addressing the one thing that will drive all three – sustainable growth.
Mr. Carberry continued to explain how the Budget could be utilised to improve the skill-sets of employees and bolster employment:
A Budget for business would avoid sucking cash out of businesses when cashflows are under pressure, and encourage business investment. The right approach to skills – including at entry-level – new technology and better management will be key.
That will help to deliver the high pay, high skill economy that we are all aiming for, one that balances the books at the Treasury and boosts regional economies. Government must also work with business to make sure its programmes are effective, and not soundbites that don’t translate from Westminster to local economies across all four nations.
*REC’s JobsOutlook is produced by the REC in partnership with Savanta ComRes. Savanta ComRes interviewed 600 UK employers involved in hiring by telephone between 5 July and 21 September 2021.
Monica Sharma is an English Literature graduate from the University of Warwick. As Editor for HRreview, her particular interests in HR include issues concerning diversity, employment law and wellbeing in the workplace. Alongside this, she has written for student publications in both England and Canada. Monica has also presented her academic work concerning the relationship between legal systems, sexual harassment and racism at a university conference at the University of Western Ontario, Canada.
