In the context of high inflation and an economic downturn, UK employers have signalled they are determined to keep hiring in the New Year with the Net Employment Outlook remaining positive at +19% for Q1 2023, according to the latest ManpowerGroup Employment Outlook Survey.
The ManpowerGroup Employment Outlook Survey is based on responses from 2,030 UK employers and asks if they intend to hire additional workers, maintain current headcount, or reduce the size of their workforce in the coming quarter (January to March 2023). It is the most comprehensive, forward-looking employment survey of its kind and is used as a key economic indicator by both the Bank of England and UK Government.
Although UK employers intend to keep hiring at pace to maintain productivity and business as usual, the latest Outlook does mark a decline of five percentage-points on Q4 2022. With a stretched and tightened labour market to contend with, retaining skilled talent will be a key priority for many organisations.
“Talent retention is going to be a battle for most employers this year” says Chris Gray, Director at ManpowerGroup UK. “We’re seeing hiring cool for the third quarter running, but the demand for skilled talent is still outstripping supply – meaning employee choice over their working conditions and workplace remains high, resulting in job-hopping for better skills training and benefits.
“This situation can be likened to a leaky bucket – employers have to keep hiring at pace just to maintain position and not lose out amidst an ongoing skills shortage.”
Gray continues: “Where skills are in short supply, productivity is the first thing to fall. We’re seeing upskilling become increasingly important to employees, so investment is critical if employers want to retain talent and also boost their employees’ productivity.”
The IT sector leads the pack with a Net Employment Outlook of +34%, level with the last quarter, as 80% of IT firms struggle to find talent, and 58% of tech firms report IT and data skills are the most difficult to find. Employers across all industries report IT skills are in shortest supply.
However, data collected by ManpowerGroup’s IT specialist brand Experis shows 27% of UK adults wish they worked in the IT sector, with 23% saying they would consider taking courses to retrain and move into the industry.
Gray explains: “Despite prominent news coverage of tech firms laying off staff, the IT industry is still struggling to find skilled talent more than any other sector. Demand for tech skills is outstripping supply, even though the data tells us there is great enthusiasm for working in tech if the skills training is available. Employers need to provide upskilling and reskilling opportunities to attract and retain the best talent.”
The Finance and Real Estate sector is reporting a Net Employment Outlook of +18%, a decline of 22 percentage-points on last quarter and down 26 percentage-points year-on-year. Despite the sharp decline, hiring levels remain very positive as the sector returns to business as usual. However, 80% of employers in the sector are struggling to find skilled talent – the most of any sector.
“The Finance sector is struggling more than most to retain skilled talent” explains Gray. “There is a longstanding challenge with reskilling in the sector. Firms are having to hire at higher-than-average rates to bring in new talent because there aren’t sufficient reskilling and upskilling opportunities to provide high-value employees with high-demand skills, resulting in attrition. We’re especially seeing younger employees leaving the sector because they lack mentor figures and upskilling opportunities.”
The Net Employment Outlook for all UK regions remains positive, with hiring plans above the national average in London with an Outlook of +24%, a decline of four percentage-points on last quarter and down 18 percentage-points year-on-year. Hiring confidence is strongest amongst employers in the North East (+27%) and the weakest in Yorkshire & Humberside (+4%).