Jobs market ‘stops moving’ as employment costs weigh on hirers
The UK’s jobs market has “largely stopped moving” as employment costs weigh on businesses and block jobseekers’ progression into the world of work.
Private sector employment intentions are stuck at the lowest ever level outside of the covid-19 pandemic, at plus 11, according to the Chartered Institute of Personnel and Development (CIPD).
The organisation, which represents the UK’s human resources sector, has found that hiring levels among UK firms has weakened while redundancy levels have not risen.
This suggests that Britain is locked in a “low hire, low fire” environment that is becoming the “new normal,” the CIPD said.
“A stagnant labour market closes off routes into work for first-time jobseekers, blocks progression for existing employees, and erodes the talent pipeline organisations rely on to refresh skills and support innovation,” said James Cockett, CIPD’s senior labour market economist.
Just three in five (57 per cent) private sector employers plan to hire in the next three months – marking another joint low outside of the pandemic, according to CIPD’s survey of more than 2,000 businesses.
The difference between employers expecting headcount to rise and those planning to see it fall – known as the net employment balance – remains stuck at plus nine, near its lowest level outside of the pandemic.
Burnham urged to cut NICs
Only a quarter (26 per cent) of bosses expect staffing levels to rise in the next quarter, while 17 per cent anticipate a decrease, according to the survey.
Despite falling overall vacancies, 31 per cent of employers are still reporting hard-to-fill vacancies.
While labour demand has cooled, this suggests that industries like construction, healthcare and social care are still facing skills shortages, the CIPD said.
“Our findings suggest that bolder measures are needed to give employers the confidence they need to hire, and in particular, to support young people into work,” Cockett said.
The CIPD called on Andy Burnham to reverse the hikes to employer national insurance contributions (NICs) introduced by former Chancellor Rachel Reeves.
This, as well as cancelling the planned abolition of age-based wage levels, would make it easier for businesses to create more entry level jobs, the HR trade body said.