January's Jobs Outlook survey, which tracks future hiring intentions rather than actual placements, confirms many employers are now waiting for an upturn in economic prospects before they commit to growing their workforce.
A marked dip in the short-term prospects for permanent staff was reflected in a two point drop over the month with 63% expecting to increase their workforce and another 31% planning to retain their present headcount. With regards to the longer term outlook, 59% expect to take on more permanent staff over the next twelve months and another 39% intending to maintain staffing at existing levels, an eight point decrease on the previous month.
Despite the dip in business confidence, it is interesting to note that a significant number of businesses plan to increase or maintain staffing levels in the short and medium term.
Employers identified a number of key sectors where skills shortages were likely to be encountered over the coming year. On the permanent side, shortages were expected in professional and managerial roles; nursing, medical and healthcare; and education and training. For temporary staff, skills shortages were likely to occur in driving and distribution (21%), catering and accommodation (21%) and accounting/financial (16%).
Despite the first 12 week qualifying period for agency workers to receive equal treatment having been reached in December, expectations over short term demand for agency staff have remained stable.
More than a quarter (27%) of employers plan to increase their use of agency workers during this period, with another 57% saying theirs would remain at the same level - a total of 84%. The long-term forecast is for most employers (65%) to keep their usage at existing levels while 22% said they planned an increase.
Roger Tweedy, the REC's director of research said: "Last November's figures showed that many employers were hoping to slightly increase their permanent workforces early in the New Year. However, there has been a significant dip in employer optimism that is likely to be linked to continuing economic concerns over the sovereign debt crisis in the Eurozone.
"Most employers have retrenched to a much more cautious 'wait and see' approach, which is starting to be reflected in the REC's Employer Confidence Barometer index which fell back one point from the month before. However it is important to note that this confidence index is still five points above its lowest mark last September and that a significant number of businesses still plan to take on new staff during the course of year, despite the slight change in mood."