The rise in interest rates on 3 November to 3%, coupled with the Bank of England’s chilly economic forecast, could see firms facing serious recruitment quandaries, the Institute of Directors has stated.
Meanwhile, a sharp fall in new job advertisements in mid-October may be a sign of fears over higher interest rates and measures contained within the government’s autumn statement, says the Recruitment and Employment Confederation.
Kitty Ussher, chief economist of the Institute of Directors, told Personnel Today: “Today’s forecasts from the Bank of England suggest that there will be little in the way of let-up for employers finding it difficult to recruit, well into 2023. The Bank cited evidence received from its UK-wide network of agents that suggested firms were reluctant to lay people off even if there was a recession, until they were sure that their own order books were definitely suffering a downturn, simply because they feared they would be so difficult to replace. By the end of 2023 and into 2024, however, the projection is that unemployment will start to rise sufficiently that those firms who are looking for staff will find it an easier market to recruit from.”
“Of course,” she added, “raising the cost of borrowing also deters business investment, choking off growth. As we get into the New Year, the Bank of England needs to be careful not to overshoot in its response, risking a longer fall in demand than is necessary.”
In the week of 17-23 October, there were 1.4 million active job advertisements, according to the Recruitment & Employment Confederation (REC) and Lightcast labour market tracker.
New postings fell in the week of 17-23 October, with 154,000 new job advertisements posted – 3.4% lower than a month earlier. The previous week saw strong demand with 217,000 new postings, suggesting that demand, while volatile, remains at a high level overall.
Neil Carberry, chief executive of the REC, said: “After a lull over the summer and during the period of national mourning for the Queen we saw a recovery in hiring in late September. This continued through most of October, with some slowing in the most recent week. Overall, we are still seeing strong demand.
“There are some signs of greater volatility driven by economic and political uncertainty. But these cyclical trends are being offset by a substantial labour shortage that means firms still need to hire, even when growth has slowed.
The figures did not reflect the rise in interest rates on 3 November to 3% or the news that the UK economy was entering recession, part of a trend that may yet dampen recruitment plans.
However, Carberry, did have a message for Jeremy Hunt, who is finalising plans for his autumn statement: “On 17 November, the chancellor has a chance to set out plans for growth which underpin investment by businesses in improving productivity, from skills to employment support to technology. This should include reforming the failed apprenticeship levy to deliver skills where they are needed, better thinking on transport and childcare to support people returning to work, and an immigration system that flexes to meet our economy’s needs.”
Occupations that saw the steepest decline in job advertisements were pharmacy assistants (-17%), bar staff (-16.4%) and waiting staff (-12.8%).
Three of the only four hiring hotspots with positive growth in the week from 17-23 October were in the north west of England, at Blackpool (+9.3%), Lancaster and Wyre (+2.1%), and East Cumbria (+0.2%). Seven out of the bottom 10 local areas for growth in active job postings were in Northern Ireland.
John Gray, vice president, UK operations at labour market analyst Lightcast, said the lower number of job advertisements in the week beginning 17 – with 70,000 fewer than the previous week – “may well be a reflection of the general volatility and uncertainty we are seeing in Westminster and in the economy”.
He added that at the same time, “when we look at the total number of active job postings, the picture is much more stable, with the numbers having remained at around 1.5 million since the middle of August”.
Gray said that although employers “may well be nervous about committing to new hires right now, they still have existing positions which they have not been able to fill, and which they are continuing to advertise for. This, combined with the lowest unemployment rate over the past 20 years suggests that, even in this time of volatility and instability, we are still seeing a very tight labour market.”
Dr Maria Rana, macroeconomic expert from the University of Salford Business School, told Personnel Today there were already signs of the job market slowing down. She said: “Despite the unemployment rate of 3.5% being the lowest since 1974, there are already signs of the labour market slowing down, and we should expect this to continue as GDP is expected to fall further, the cost of borrowing for firms to increase as well as energy bills.”
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