Tense Brexit negotiations and declining staff availability put a strain on businesses In the face of ongoing uncertainty relating to the negotiations around the UK’s withdrawal from the EU, business confidence in economic conditions has deteriorated. According to the REC’s latest survey of employers (JobsOutlook, September 2017), sentiment across the last quarter of June to August has fallen markedly, with confidence in economic conditions at the worst level since the EU referendum in June 2016.

Specifically, 7% more employers thought economic conditions were worsening rather than improving, a complete reverse of the figures in the same period in 2016. Ongoing political and economic instability appears to have particularly hit the smallest employers, which form the backbone of UK plc.

Despite employers’ deteriorating economic outlook, confidence in making hiring and investment decisions remains stable. However, employers are increasingly concerned over candidate supply to meet their needs, as staff availability in many areas of the jobs market declines at quicker pace. Particularly, the availability of candidates to fulfil permanent job roles continued to decline sharply in August, with the rate of deterioration slightly quicker than seen in the previous month. Meanwhile, supply of temporary staff fell to the greatest extent in 20 months.

As such, employers are increasingly turning to recruitment agencies as it becomes harder to find the people they need. As September’s Report on Jobs report shows, there are two distinct trends at play. Businesses need people with the capability to steer a course amid ongoing political and economic instability, which is creating high demand for roles like financial directors, analysts and professionals in compliance and HR. Meanwhile, there is a well-documented shortage of people to fill blue-collar roles such as drivers, electricians and construction, and this being exacerbated by a fall in net migration from the EU.

7% more employers thought economic conditions were worsening rather than improving, a complete reverse of the figures in the same period in 2016. Ongoing political and economic instability appears to have particularly hit the smallest employers, which form the backbone of UK plc. 

With a scarcity of candidates and existing skills shortages being exacerbated by Brexit, it is unsurprising that employers are having to offer more money to secure the people with the skills and talent they need. 

With a scarcity of candidates and existing skills shortages being exacerbated by Brexit, it is unsurprising that employers are having to offer more money to secure the people with the skills and talent they need. Growth of permanent starting salaries accelerated for the fourth month running in August. Notably, it was the quickest rate of pay inflation seen since October 2015. Pay for temporary staff also increased at a faster pace, rising at the steepest rate for 16 months in August. While the working population in general has experienced a pay squeeze since the EU referendum owing to rising inflation and slower economic growth, there are clearly opportunities now for those with particular skills to earn more by moving jobs. For employers, however, the sustainability of this trend is of increasing concern particularly given the declining productivity and the uncertainty around labour arrangements and the trading relationship with the EU.