A recent survey by the Recruitment and Employment Confederation (REC) has shown a significant crash in demand for workers in Britain, with the index of demand for staff slipping to its lowest reading since August 2020. The REC’s index fell from 46.1 in October to 43.9 in November, indicating a sharp decline in hiring needs among employers.
The collapse comes after the new Labour government’s first budget, which introduced several tax increases aimed at reducing public debt. While some forecasters have predicted that these measures will boost economic growth in the long run, others warn of a potential slowdown in the labour market.
Employers are taking steps to mitigate the impact of the increased costs on their businesses, with many planning to reduce employment and lower wages. A recent survey by the Bank of England found that 54% of businesses expect to respond to higher costs from the budget by reducing employment, while 38% anticipate lower wages.
The REC’s Chief Executive Neil Carberry has expressed concerns about the impact of the tax rises on employers’ hiring decisions, saying “it should be a surprise to no-one” that firms are re-assessing their hiring needs. The question now is whether businesses will return to the market in the coming months.
While some experts have predicted a potential downturn in the labour market, others see reasons for optimism. Jon Holt, group chief executive of KPMG UK, notes that expected interest rate cuts in 2025 and government investment plans may help offset the impact of the tax increases.
Source: https://www.reuters.com/world/uk/demand-uk-workers-crashes-budget-aftermath-rec-survey-shows-2024-12-09