How Brexit chilled the jobs market this summer, as employers freeze up on professional hires
For those who were hoping to polish off their CV during the summer holidays and find happiness in professional pastures new come autumn, recent statistics have been unwelcome.
A study released this week by the Chartered Institute of Personnel and Development (CIPD) and Adecco discovered the proportion of employers expecting to increase their staffing numbers over the next three months slumped to 36 per cent, down from 40 per cent before the vote.
Looking specifically at London’s jobs market, permanent placements fell for the third month straight in July, according to a Recruitment & Employment Confederation (REC) and Markit report released towards the start of this month.
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Tomorrow marks the release of the most recent set of labour market figures from the Office for National Statistics (ONS), which will track the numbers in work in the UK between April and June. Spreadbetters IG predict that, while joblessness will have remained reasonably subdued, unemployment could inch up from 4.9 per cent to five per cent.
“If [tomorrow’s ONS figures show] the labour market’s already starting to slide, most of those numbers will have been affected by pre-Brexit decisions,” explained Ian Brinkley, acting chief economist at the CIPD. “So, if those are already starting to weaken before we get to Brexit, it means the forecast for the rise in unemployment looking pretty firm at the moment.”
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However, not everyone in the City is downbeat. Hakan Enver, operations director at Morgan McKinley Financial Services, believes that a fall in hiring may simply indicate hesitation due to economic uncertainty rather than the beginning of a long-term trend. “You’ve got to think, there were three months of complete back and forth on people’s opinions on which way everybody was going to vote,” Enver said.
Regardless of the cause, a dip in the market is not just bad news for anybody currently hunting for a job – it’s also bad news for the people whose job is finding jobs for others.
Last week, recruitment firm Pagegroup revealed it had scaled back its UK headcount by three per cent during the first half of the year, citing “tougher trading conditions” and commenting that its profits in the region had fallen thanks to “uncertainty impacting clients’ decision-making in the lead up to the EU referendum”.
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Figures shared with CityAM by REC showed that while 44 per cent of recruiters had witnessed no reaction from their clients following the revelation of the Leave decision, 47 per cent said clients had adopted a wait-and-see approach to their hiring strategies. Meanwhile, three per cent said clients had indicated they did not plan to renew contracts and an unfortunate five per cent had seen some clients pull the plug on contracts.
Pagegroup’s results also revealed it was the top end of the market that stumbled in the run up to the referendum, with higher-salary focused Michael Page faring worse in the UK than the firm’s other divisions.
Robert Walters, which reported a four per cent increase in UK net fee income but a drop in operating profit to £1.8m from £2.8m in its most recent half-year results, pointed towards London’s financial services space as a particularly problematic area during the period.
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“You’re more likely to hedge if you’re appointing someone on a senior, managerial professional salary than if you’re appointing someone to do an admin job on £20k,” added REC chief executive Kevin Green.
However, despite the tricky trading conditions, there is little sign that a slew of recruiters’ jobs are immediately in the firing line.
“We have not been made aware of any members who are planning on cutting UK headcount as a result of the UK’s decision to leave the EU,” said Association of Professional Staffing Companies operations director, Samantha Hurley. “That is not to say that it won’t happen – but in reality it is just too early to ascertain if Brexit will have any long-term impact on the wider staffing sector.”
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Brinkley added current forecasts for any impending recession were for something “pretty shallow and not lasting that long”.
Meanwhile, Green pointed out that despite a slowdown, employers were still placing job adverts with recruiters, and the market for temporary and contract work remained relatively buoyant.
“I think all you’ve got is a big shock, employers have got a bit scared, have hedged permanent hiring, demand still seems to be there,” Green said. “It could come back very quickly. It wouldn’t surprise me if in September, October, we see employers making more and more permanent hirings.”