Research from the Recruitment and Employment Confederation (REC) found that while employer perception of the UK economy was still weak, it had improved in the three months to December 2024 (net: -12) compared to three months to October (net: -28).
However, this hasn’t been reflected in hiring confidence, which fell by three points, from net: -2 to net: -5 over the same comparison period.
Findings from the latest REC JobsOutlook, which surveyed 634 UK employers, was published yesterday (29 January).
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The data also suggested that hiring is a long way from the near-term peak of net: +16 in the three months to June 2024.
Neil Carberry, the REC's chief executive, told HR magazine that the survey findings showed employers were struggling with the government's budget, citing the national insurance rise hitting hiring intentions, creating “headwinds” for HR.
The survey also found that around 14% of surveyed employers highlighted plans to reduce their permanent headcount in the next three months – up from 5% in the three months to October.
But Carberry believes that a strategic, rather than reactive approach, might put employers in good stead for longer-term success.
He added that many business leaders should already be used to dealing with a competitive UK recruitment market.
Carberry said: “Hiring isn’t just a task – it should be a strategic priority. Too many companies haven’t yet grasped that."
Felecia Wood, a director at HR consultancy Croner, said that, despite challenges caused by government policy, many businesses will likely need to hire, so they shouldn’t wait for a period of stability.
Speaking to HR magazine, she said: “For some employers, an immediate need for a new employee may outweigh a desire to wait for stabilisation.
“To mitigate cost, options could include using temporary or fixed-term contracts, hiring agency workers, and hiring on a part-time basis.”
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Similarly, Quentin Debavelaere, general manager North Europe at hiring platform Malt, said that while the budget might have made employers less bullish about hiring, there are options out there, not least to use contract workers (whose rates are considered lower at the moment). He added that employers should be aware of the increased scrutinisation of so-called false contracting, which could fall foul of the IR35 crackdown.
Debavelaere also added that, while employers are slightly more positive about the overall economic outlook, they might have put hiring plans on ice as a reaction. Organisations can remain competitive by taking a longer-term view, he advised.
Debavelaere told HR magazine: “The focus should be on strategic workforce planning, ensuring businesses remain competitive while mitigating long-term cost risks.
“Ultimately, while waiting for economic stabilisation may seem like a safe approach, but delaying hiring decisions could mean missing out on top talent.
“A blended workforce strategy is the best way forward.”