Over half of UK employers plan to recruit in Q1 of 2021

Over half (56%) of UK employers expect to recruit in the first quarter of 2021 with fewer firms now planning redundancies, confirmed CIPD and Adecco. 

That’s up from 53% in the previous quarter; and up from 49% compared to six months ago, according to their latest Labour Market Outlook report. Sectors that are indicating strong hiring intentions include healthcare (80%), finance and insurance (65%), education (65%) and information and communications (67%). However, this optimism does not extend to sectors that continue to be affected by the social distancing measures, such as hospitality (36%). In fact, around a quarter (27%) of companies surveyed in the hospitality sector indicated they are “prepared to reduce their headcount further in the first quarter”. 

Firms in the private sector, however, signalled more willingness to maintain their workforce; with the number of employers saying they are planning redundancies dropping from 34% to 20%. Overall, the share of organisations planning to make redundancies in the first quarter fell sharply from 30% to 20% compared with the last quarter. 

RISING EMPLOYMENT INTENTIONS

The rise in net employment intentions is largely driven by private sector growth, which has seen an increase to +11 from –5 in the previous quarter. The CIPD attributes the increase in employer confidence to a combination of factors. They include the Brexit free trade agreement, the extension of the Coronavirus Job Retention Scheme to the end of April and the anticipation of economic recovery later this year.  While these are encouraging signs for the labour market in the short term, the uncertainty of both future restrictions and government support beyond April could further test business confidence in the medium-term. The CIPD is therefore urging the government to extend the Coronavirus Job Retention Scheme until at least the end of June to help support sectors most affected by the restrictions.

“These are the first signs of positive employment prospects that we’ve seen in a year. Our findings suggest that unemployment may be close to peak and may even undershoot official forecasts, especially given the reported fall in the supply of overseas workers,” noted Gerwyn Davies, Senior Labour Market Adviser at the CIPD, the professional body for HR and people development. “However, it is far too soon to rule out further significant private sector redundancies later in the year if the government does not extend the furlough scheme to the end of June or if the economy suffers any additional unexpected shocks. It would be hugely counterproductive if the government’s financial support faltered while some of the biggest sectors of the UK economy are still in survival mode.”

RESKILLING & UPSKILLING VITAL

Adecco also believes that Government support will remain a key factor in helping to minimise any further job losses. “The start of 2021 has been challenging, with the UK entering into its third lockdown. It is still positive to see some signs of labour market recovery, with a clear rise in net employment intentions. The furlough scheme and redeployment have enabled many organisations to avoid redundancies during the pandemic, and as we continue to transition into the new era of work, government support will remain a key factor in helping to minimise any further jobs fallout,” pointed out Alex Fleming, Region President of Northern Europe, Adecco Workforce Solutions.

However, investing in reskilling and upskilling will also “remain an important tactic in future proofing the workforce”, she added. “Even with a Brexit deal and the vaccine rollout underway, there is uncertainty, particularly among the younger generation, when it comes to remaining in the UK for work. Therefore, companies that invest in career development, enhancing the skillsets of employees and maintaining a positive workplace culture will help to strengthen their talent attraction and retention strategies during what remains such an unprecedented time.” 

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