Employers ‘avoiding knee-jerk reactions’ after referendum

Employers 'avoiding knee-jerk reactions' after...The last two months have undoubtedly been a time of uncertainty for organisations and employees. Britain’s decision to leave the European Union will not become official until Article 50 of the Lisbon Treaty is triggered, but many people are still expecting businesses to be hesitant in the meantime.

However, recent Office for National Statistics (ONS) data indicated the employment market was showing signs of strength ahead of the referendum vote. The organisation revealed that the unemployment rate dropped to 4.9 per cent between April and June 2016 – the lowest level in eleven years.

Research from the Recruitment and Employment Confederation (REC) told a similar story last month. The REC’s JobsOutlook survey in July revealed 45 per cent of employers felt the economy was performing better, with only 21 per cent believing conditions were deteriorating.

Meanwhile, the REC’s latest research, which was published on Wednesday (August 24th), showed 88 per cent of businesses intend to either hire more people or keep their headcounts the same over the next three months. Just three per cent claimed they were going to reduce staffing levels.

“In general, employers have avoided knee-jerk reactions to staffing and this ‘business-as-usual’ approach bodes well for the UK jobs market in the next few months,” said REC chief executive Kevin Green.

“Recruiters tell us that while their clients are taking longer to confirm permanent appointments, vacancies have continued to grow since the referendum.”

Forming a Brexit strategy

The Federation of Small Businesses (FSB) admitted the UK had experienced some economic and political turmoil in the month following the referendum. Nevertheless, the organisation claimed its members are “used to dealing with difficult times”.

Small businesses are responsible for hiring 60 per cent of all private sector employees and comprise 99 per cent of UK companies. According to the FSB, these organisations have a combined annual turnover of £1.8 trillion a year, making them a crucial driver of the country’s economy.

The federation said there are four areas that are important to small business growth in a post-Brexit environment:

  • Freedom of movement
  • Access to the single market
  • A clear future for regulatory frameworks
  • The future of EU funded schemes

The FSB’s remarks were echoed by the REC, with Mr Green stating that policymakers must ensure that UK employers still have access to European candidates to fill any skills gaps that might arise.

“As business continues to do its bit we now need government to show the same level-headedness to restore economic confidence,” he stated.

Is the UK economy recovering?

His comments come as various other indicators suggest the initial shocks of the EU Referendum vote are beginning to wear off. The latest manufacturing, retail and housing figures have all suggested that businesses remain resilient despite a potential Brexit.

The Confederation of British Industry revealed manufacturing exports climbed to their highest level in two years due to the drop in the value of the pound. Both the ONS and Nielsen pointed to retail sales increases because of the recent hot weather and excitement over the Olympics.

Even housing, where experts had predicted prices and buyer interest would plummet, appears to be holding steady. The Royal Institution of Chartered Surveyors monthly research found that 24 per cent of estate agents and surveyors predicted property values will rise within the next 12 months – up from zero per cent the previous month.

The results are likely to encourage jobseekers, as they suggest British businesses are showing signs of recovering from the early economic effects of the referendum outcome. We won’t know the true Brexit impact until the UK begins the formal process of leaving the EU, but for now at least, things appear to be returning to normal.

Our Market Reports combine our review of the prevailing conditions in the corporate governance recruitment market together with the results of our latest employer survey.

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