Hiring to hit 18-month high to fix ‘leaking bucket’

Hiring intentions will rise to their highest level for 18 months in the first quarter of 2019, as employers seek to fix their “leaking bucket” ahead of Brexit.

ManpowerGroup’s latest Employment Outlook Survey found that, despite widespread economic uncertainty, the net employment figure is expected to hit +6% in the first three months of next year as recruiters try to plug skills gaps, especially in retail and the public sector.

The survey asked 2,102 employers whether they intend to hire additional workers or reduce the size of their workforce in the coming quarter.

The net outlook is calculated by subtracting the employers that plan to reduce headcount from those who plan to hire staff.

“As we enter the Brexit home straight, the picture in the jobs market is very mixed. Overall, hiring intentions have risen, but this masks an interesting phenomenon in some sectors that we can best describe in terms of a leaking bucket, where employers are hiring to plug leaks in the workforce rather than to grow,” said James Hick, managing director for ManpowerGroup Enterprise.

Optimistic retail outlook

Hiring intentions in the retail and hospitality sector reached their highest in more than a decade, with an outlook of +7%.

Employment in retail alone is expected to hit +12% in early 2019 – a 13 year high – despite dwindling footfall on the high street and reports of up to 85,000 jobs being cut in 2018.

Hick said that, with a staff turnover rate of 30-40%, retail has an ongoing need for new talent. However, this has been exacerbated by the decline in the number of migrant workers from the EU. In the 12 months to the end of March 2018, only 87,000 more EU nationals moved to the UK – the lowest figure since 2012.

In a bid to attract and retain more workers Hick said many retailers had awarded pay rises. For example, Aldi increased pay by 4% earlier this year.

Public sector recruiters expect a +8% net hiring figure – a seven-year high. But with large skills gaps to fill in organisations like the NHS, Hick said the “leaking bucket” is likely to continue despite recruitment efforts.

These pressures stand to significantly increase if the current uncertainty over Brexit deters more migrants from coming to the UK and net migration from the EU continues to fall” – Ian Brinkley, CIPD

Effect of falling migration

A recent report from the National Institute of Economic and Social Research found the number of EU nationals joining the NHS fell by 17.6% in 12 months after the EU referendum, while the number of leavers increased by 15.3%.

“After so many years of austerity, the public sector has been crying out for investment, and we have already seen hiring intentions jump this quarter,” Hick said. “However, we are also seeing the leaking bucket phenomenon play out here too.”

The net employment outlook in finance is expected to be +8%, despite some organisations looking at moving their offices abroad after Brexit.

The Office for National Statistics’ latest Labour Market Outlook shows that the number of people in work and the number of unemployed people both increased between May-July 2018 and August- October 2018. Meanwhile, the number of people aged 16 to 64 not working or not seeking a job fell.

Ian Brinkley, acting chief economist at the CIPD, said the tightening of the labour market meant skills shortages would likely increase and recruitment and retention would become more challenging.

“These pressures stand to significantly increase if the current uncertainty over Brexit deters more migrants from coming to the UK and net migration from the EU continues to fall,” he said.

“It’s vital that employers look at how they can invest in skills and adopt the right people management practices to boost productivity in their organisation and the UK overall.”

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