UK economy at a tipping point, but the workforce continues to have control amid skills shortages for now

The UK economy may be at a tipping point as interest rates remain unchanged, but job seeker confidence remains high in an unusual scenario that will only put greater pressure on the country’s employers. That’s according to specialist recruitment firm, Robert Half.

Following reports that the Bank of England (BoE) will pause on its interest rate rise for the first time since November 2021 and the decline in inflation, the firm has warned that job seeker confidence continues to grow as the UK workforce increasingly recognises its worth amid skills shortages.

In Robert Half’s latest Jobs Confidence Index (JCI) – an economic confidence tracker produced in partnership with the Centre for Economics and Business Research (Cebr) – the specialist recruiter found that pay sureness in the workforce increased 70.1 points, returning to positive territory for the first time since Q2 2022. The overall confidence reading also increased to 47.2 - the highest recorded level since Q1 last year.

As Matt Weston, Senior Managing Director UK & Ireland, at Robert Half, explained, this is an unusual situation that may help employers who are willing to go the extra mile for the right talent to attract them:

“We’re facing a highly unusual economic climate and the BoE seems to be well aware of that in view of the cliff-hanger decision to halt interest rate rises for the time being. And despite the labour market showing marginal signs of loosening, there is still enough scope of concern with wage growth surpassing inflation. Recent economic data published last week revealed the UK unemployment rate rose, the number of people in work decreased and vacancies fell below one million for the first time in two years - a clear loosening of the historically tight labour market. Nonetheless our Jobs Confidence Index is being driven by positive candidate sentiment and wage inflation. The consequence of this is job seeker confidence is perhaps the most pressing issue if you are trying to hold onto your valued employees.

“We’ve seen over the course of the last year or so an unusual behaviour in the workforce. Traditionally reports of recession and significant changes in inflation or interest rates are pre-empted by job losses and uncertainty from the workforce. This hasn’t happened, largely due to the significant lack of skills that the country is facing. With job seeker confidence and pay sureness increasing in the workforce, businesses have two challenges to manage - flight risk of existing employees who know their worth seeing how wages are rising, as well as attracting the talent they critically need at a cost that is in line with current budgets.”

“As we warned back in June, there simply is not enough talent in the UK to satisfy the demand in the UK labour market. One thing I can predict, though, is the trend of decreasing vacancies will lead to more candidates per vacancy, which will inevitably give hiring managers more choice for a while.”