Recession slowing labor market and worsening talent shortage

Despite employers beginning to rein in hiring ambitions and, in some sectors, make redundancies, the tendency of workers to seek security in their current job means that skills shortages may continue to worsen, according to the report.

Neil Carberry, chief executive of the REC, said January would prove a real test of the labour market.

“People telling recruiters that they are increasingly anxious about moving jobs is a concern in this regard, as a move is a great way to boost pay and build up skills,” he said.“If people are less willing to move jobs, this could make shortages worse in the near term. That is why a stable economy, and support to address labour and skills shortages – from welfare to work support to immigration and skills reform – need to be major priorities for the UK government.”

While caution over the UK recession has cooled the growth of vacancies to its lowest rate since February 2021, the report emphasised that the recruitment market remains tight.

Carberry added: “Overall activity levels remain high, with vacancies and starting rates of pay still growing. There is also plenty of demand for temporary workers, which is less affected by employers’ long-term confidence.

Job security is a worry as the recession continues

“The overall picture is still of a robust labour market, although contraction in sectors such as construction is a particular concern given its significance to the health of the economy.”

A separate study of the UK workforce by HR platform Remote found that nearly half (44%) of employees are worried about their job security because of the recession. With so many employees worried about their job security Ben Harris, VP EMEA North of people analytics company Visier, said it is important to maintain strong communication channels with workers.

He told HR magazine: “With more organisations announcing mass layoffs, and the expectation that these are set to climb as businesses continue to cut costs in the face of the recession, it’s important that if businesses need to make cuts, they manage the process effectively to maintain a positive company culture and support departing – and surviving – staff.

“Now, more than ever, employees are looking to their employers for honest and open communication about the health and future plans for the business.”