Global uncertainty adding to employers’ reluctance to hire, says the CIPD

Responding to today’s ONS labour market figures, James Cockett, senior labour market economist for the CIPD, the professional body for HR and people development, comments:

“As expected, unemployment has risen this month, as employers continue to grapple with rising costs. Expectations are that unemployment could rise to five and a half percent by the end of the year, potentially hitting the two million mark. The latest ONS data covers the first quarter of the year, but continuing uncertainty in the Middle East can only have added to employer’s reluctance to hire, on top of rising employment costs seen over the past year or more. Not only are these costs impacting hiring decisions but are also putting employers' growth plans on pause, as indicated by our latest Labour Market Outlook survey.   

“The fall in vacancies in the last year is almost entirely driven by falling vacancies among SMEs, the backbone of the UK economy. If the Government is to start to address the UK’s ongoing ‘low growth, low productivity’ challenge it needs to develop a more ambitious plan for growth beyond its narrow industrial strategy sectors to boost skills investment and technology adoption across all sectors of the economy.  

“It also needs to consult meaningfully and potentially compromise on key measures in the Employment Rights Act still to be finalised in secondary legislation to ensure they don't further undermine employment and growth. Just as important there is need for adequate support and guidance for SMEs to help them comply with the new laws. 

“Pay growth has fallen to its lowest level since the pandemic with real pay growth teetering just above zero. As inflation is set to rise, employers will have a tough job in setting pay for the year ahead, balancing affordability with cost-of-living concerns.”

• The CIPD issued its quarterly Labour Market Outlook report yesterday, looking at employers’ hiring, pay and redundancy intentions. Full report here.