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Hiring has fallen more sharply in the UK than in other major economies over the past year as worries over weak growth and rising wage bills lead some businesses to cut headcount.
UK job postings were 13 per cent below their pre-pandemic level and 23 per cent lower than a year ago, according to figures published on Tuesday by the job search site Indeed — a bigger retrenchment than in any of the other markets it covers, including the US, France, Germany, Canada and Australia.
Jack Kennedy, senior economist at Indeed, said this was because the UK faced “stronger headwinds to hiring” even before the government’s recent announcements of higher employment taxes — with “a bigger cost of living squeeze, political uncertainty and weak business sentiment”.
The slump in hiring has been deeper and more prolonged in tech and other professional sectors, with UK job openings in software development, information design and media and communications more than 40 per cent below the levels of 2019.
But Kennedy said the slowdown in white-collar recruitment was common to all the countries tracked by Indeed, with employers finding it easier to attract candidates for roles that could be performed remotely than to fill lower-paid vacancies for on-site work.
The UK is unusual because it is also seeing a sharp drop in hiring in low-wage sectors where other countries still have high vacancy rates — with job postings a third below their 2019 level in hospitality and tourism, and down by more than 10 per cent in retail compared to that year.
These worries will now be compounded by the rise in employers’ national insurance contributions, which will hit hardest in low-wage sectors where a high proportion of employees work part-time.
Gauging the state of the UK labour market is harder than usual at present, because of the ongoing lack of reliable official data that would usually form the basis of monetary and fiscal decision-making.
Bank of England policymakers judge the jobs market to be relatively tight overall, despite the slowdown in hiring, and there is no evidence yet of significant job losses.
UK unemployment remains relatively low according to the Office for National Statistics’ headline measure of 4.3 per cent and separate figures, based on tax records, suggest payrolled employment has been flat rather than falling in recent months.
Meanwhile Indeed’s cross-country wage tracker, which measures growth in advertised pay rates for new hires, shows UK wage growth is still much higher than in other countries, at 6.7 per cent as of October — a worry for the BoE and a puzzle, given employers’ lack of demand for new staff.
One possible explanation is that employers who struggled to hire when Covid-19 lockdowns lifted are still wary of losing staff they might be unable to replace.
“Firms are reluctant to hire but don’t want to lose the people they have,” said Andrew Goodwin, chief UK economist at the consultancy Oxford Economics. “People who are in a job will probably stay in it. People who haven’t got a job will find it quite hard to enter the labour market.”
Michael Stull, managing director at the recruiter ManpowerGroup UK, said the prolonged “hiring recession”, coupled with low unemployment and strong wage growth, was unprecedented.
Businesses now saw reduced hiring as “the fastest path” to limit the damage of next year’s rise in employment taxes, and were also starting to see the potential for artificial intelligence to reduce the need for staff, he said.
But the long-running slowdown in white-collar hiring was also partly due to employees becoming more worried about the economic outlook, and less willing to take the risk of jumping ship.
“Workers are holding tight . . . [In previous downturns] the last ones in were the first ones out,” Stull said. “No one wants to be the last one to be hired.”
Data visualisation by Amy Borrett.
Credit: Source link
