Employers in the UK are the least confident in Europe about their ability to hire additional workers – but they are significantly more optimistic about their recruitment prospects than they were six months ago.
ManpowerGroup’s latest Employment Outlook Survey, which is used as a key economic indicator by both the Bank of England and the UK government, revealed a net employment outlook of -6% for Q1 2021.
Although this represents an overall decline in employers’ ability to hire, it is up from -12% recorded earlier this year.
Just 49% of UK organisations expect their hiring to return to pre-pandemic levels within the next 12 months.
Some 1,306 UK employers were asked about their intentions to hire additional workers or reduce the size of their workforce in the coming quarter.
UK employers were the least positive in Europe, behind Switzerland (-4%), Austria (-2%), Spain (-1%) and Slovakia (-1%).
Greece was the most optimistic nation, with 9% of employers expecting to increase headcount. It was followed by Germany (8%), Turkey (8%), Ireland (7%) and Sweden (7%).
Other countries in the Europe, Middle East and Africa (EMEA) region were included in the data, including South Africa and Israel.
Mark Cahill, ManpowerGroup UK’s managing director, said: “The headline numbers are steadily moving in the right direction, and we are seeing a continued resurgence in key sectors like finance and business giving us reasons to be cheerful as we head into 2021. However, despite this positive trajectory, the UK remains the least optimistic in Europe, with continued uncertainty over Brexit and the effects of a second Covid-19 wave still looming large.”
Retail and hospitality businesses were the least optimistic about their ability to hire, with the net employment outlook for this sector down two points to -13%. ManpowerGroup said this was the weakest figure for the sector on record.
Employment prospects in London also looked weak, at -15%. For Q4 2020 the outlook was -11%. This suggests more redundancies in the capital could be imminent.
Cahill said: “London’s shuttered shops are a stark reminder of the economic impact of the pandemic. Many of the city’s largest companies stuck to their hiring plans at the start of the first lockdown but are now adopting a ‘wait and see’ approach, deferring hiring until the impact of the EU-exit and the Covid-19 in the new year is clearer.
“There is also a broader move away from the London-centric economy, with more flexible working policies providing a larger pool of candidates from anywhere in the UK.”
Job losses and skills shortages
However, there were some indications of recovery. The net employment outlook in finance and business services surged nine points to +2%, and confidence in construction drove this sector’s net figure up six points to -1%.
Cahill said finance and business services firms were able to adapt quickly to remote working. There was also strong demand for business admin, HR, and management roles as more businesses prepare for long-term remote work and Brexit.
However, he warned that the improved outlook in the construction sector could be short lived, particularly with free movement into the UK from EU and EEA nations ending this month.
“Migrant workers have been especially hard hit by the fallout from Covid-19, and nearly half a million have left the UK since March. The question will be how do we manage skills shortages through 2021, particularly in high-demand, skill-specific sectors like construction and healthcare? While some areas of the economy are going to be hit worse than others, employers need to take responsibility to bridge workers and help them upskill and reskill to prepare them for the future,” he said.