Amidst an ongoing recession, UK job seekers and employees show growing confidence.
- A report from the Robert Half Jobs Confidence Index reveals near record high job security.
- Despite economic challenges, pay confidence among UK workers has significantly increased.
- The labour market remains tight, spurred by skills shortages and elevated vacancies.
- Economic inactivity remains higher than pre-pandemic levels, posing challenges to growth.
In the face of an ongoing recession, UK job seekers and employees are displaying a surprising level of confidence. This is highlighted in the latest Robert Half Jobs Confidence Index (JCI), developed in collaboration with the Centre for Economics and Business Research (Cebr). The report points to an apparent disconnect between the economic downturn and the buoyant mood among workers, with job security reaching near record highs.
Despite the UK slipping into a shallow recession in Q4 2023, an encouraging 56.1% of employees expressed confidence in their job security for the ensuing six months. This confidence surge has propelled the job security measure of the JCI to its second highest level on record, achieving a score of 138.4. The historically low unemployment rate of 3.8% further underscores the persistent tightness of the labour market. This scenario is attributed to continued skills shortages and a high vacancy rate that surpasses pre-pandemic figures.
The JCI’s pay confidence pillar has also seen significant gains, climbing by 8.3 points to a level of 36.8 by the end of the previous year. This rise in pay confidence is largely driven by real earnings growth over three consecutive quarters, coinciding with a moderation in headline inflation. Consequently, workers are increasingly able to negotiate better wages, a situation that challenges anticipated rate cuts due to wage inflation pressures.
The unique nature of this recession suggests that it may end sooner than expected, as indicated by a reduced inflation rate of 4% in January and improvements in consumer confidence. Additionally, the bright outlook for Britain’s private sector, which has experienced its fastest growth in nine months, further supports this notion. Matt Weston, Senior Managing Director UK & Ireland at Robert Half, notes that “workers are feeling confident with regards to their job security and ability to command better pay”, despite the prevailing economic gloom.
However, the enduring skills shortages and economic inactivity, which remains above pre-pandemic levels, present persistent obstacles for business growth. The market currently has 900,000 vacancies that are increasingly difficult to fill, exacerbated by unchanged levels of economic inactivity. Addressing this issue necessitates a multifaceted strategy. Employers must support individuals unable to work due to prolonged illness and incentivise others to re-enter the workforce. Despite the encouraging economic improvements, these labour market challenges are likely to sustain upward pressure on wages.
The UK’s job market resilience amidst recessionary times highlights a complex economic landscape, driven by worker confidence and enduring challenges.
