A recent report from KPMG and the Recruitment & Employment Confederation (REC) indicates that employers in the UK are slowing their hiring processes due to rising costs and looming tax increases.
Key reasons for hiring slowdown
The permanent placements index rose to 40 in July, which is still far from the 50 level that separates growth from contraction. REC's deputy chief executive Kate Shoesmith states that many employers, especially in low-wage sectors, are pausing recruitment due to cost pressures and uncertainty around employment law.
Mixed forecasts from economists
A Chartered Institute of Personnel and Development survey shows that only one in four employers plan to hire staff in the next three months. Just 16% expect to reduce headcount. Economists are warning that without targeted support or incentives, many businesses will delay hiring plans until 2025.
Overall picture of the job market
On one hand, HMRC payroll figures show a slight decline in the number of employees over the past year, while on the other hand, ONS data indicate that employment and unemployment are both rising. Bank of England Governor Andrew Bailey noted a decline in labour demand.
Thus, uncertainty and rising costs create challenging conditions for employers, which may slow down the economic recovery in the country.
