UK employers are heading into the next decade with significantly reduced hiring intentions, according to a survey showing demand for new employees has hit a seven-year low. 

The ManpowerGroup employment survey found that hiring plans for the first quarter of 2020 are down three percentage points to 2 per cent compared to the current quarter – the lowest they have been since 2012. Its poll of 2,101 employers painted a “sluggish picture” for next year, with evidence of declining confidence in nearly every sector. 

Chris Gray, director of ManpowerGroup UK, said political uncertainty and Brexit were weighing heavily on the minds of employers.

“Employers want certainty before they can make investment decisions and firm up hiring plans,” said Gray. “Our advice is that employers must keep planning – thinking about their strategies for attraction, retention, training and succession planning to best prepare for the future.”

Hiring sentiment is strongest in the mining sector, where employers reported a net employment outlook (the number of employers who plan to increase hiring, minus the number who plan to reduce staff levels) of +5 per cent, the manufacturing sector (+4 per cent) and the construction sector (+2 per cent).

Meanwhile, transport and communications sector employers reported one of the lowest outlooks, at -4 per cent, and utilities sector employers reported the largest decrease of seven percentage points to 3 per cent.

However, Gerwyn Davies, senior labour market analyst and public policy adviser at the CIPD, said a slowdown was “inevitable” irrespective of the external environment, given strong levels of recruitment in previous years.

“The global slowdown does seem to be impacting overall demand for labour, but there is also evidence that recruitment difficulties are impacting employers’ abilities to hire suitable candidates,” said Davies.

“Investment in skills has declined at the same time recruitment difficulties have worsened. There is public money available in terms of the apprenticeship levy that organisations could be taking more advantage of.”

The study showed large regional disparities in hiring confidence. London-based employers reported a five percentage point quarterly decrease to -1 per cent, marking the capital’s first negative outlook since 2010. 

ManpowerGroup linked this decline to a four-point decrease, to 2 per cent, in the finance and business sector. In contrast, the West Midlands bucked the trend with a two percentage point increase to +13 per cent, making the region the best performer for employer hiring intentions.

Davies said employers could utilise various tactics to combat the drop, and reminded employers that recruiting EU nationals was still a viable option in the immediate term. He said: “[Employers should] take advantage of the fact we can still recruit from within the EU for the next 12 months without the need for any job offers. That will be a critical period for employers.” 

Tom Hadley, director of policy and campaigns at the Recruitment & Employment Confederation, said the next government must ensure immigration and skills policy is engineered to avoid talent shortages in vital sectors such as healthcare, hospitality and engineering. 

“The next government must also focus its attention on restoring business confidence and working in partnership with the recruitment sector and the wider business community to make great work happen,” said Hadley. 

“The most urgent priority is delaying reforms to IR35, which in their current form risk rewarding those who avoid tax while punishing hundreds of thousands of compliant contractors and agencies.”