Has the rapid vaccine rollout boosted the UK jobs market?

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The UK’s rapid vaccine roll-out is yet to translate into a bounce in hiring levels, according to the latest ManpowerGroup Employment Outlook Survey.

The UK’s jobs Outlook saw a one-point improvement on the quarter to -5%, remaining the least optimistic in Europe. But in the wake of large-scale job losses at some of the country’s best- known businesses, optimism is now surging among the UK’s biggest employers.

The survey is based on responses from 1,515 UK employers. It asks whether employers intend to hire additional workers or reduce the size of their workforce in the coming quarter.

Chris Gray, Director, ManpowerGroup UK says: “The UK may be leading the way on the COVID vaccine roll-out, but it’s still the comparative sick man of Europe when it comes to hiring optimism. This has been the weakest twelve months for the UK’s jobs Outlook in 30 years – much worse than the 2008-9 crisis.

“However, with unemployment expected to peak at 6.5% next year, far lower than 11.9% previously predicted, the hope remains that hiring confidence will snap back as the economy reopens. But the current message is clear: most employers are cautiously observing the impact of the vaccine roll-out and the longer-term effects of Brexit before taking major decisions on recruitment.”

Both these factors appear to be weighing heavy on Britain’s critical finance and business services sector. It is down eight points to -5% and has dropped 14 points in the last year.

Gray continued: “While the disruption caused by the pandemic is one factor depressing the sector’s jobs Outlook, concern about regulatory equivalence with the EU post-Brexit is reaching boiling point. We’ve already seen Amsterdam overtake London in terms of share trading volume, and industry holdouts have taken matters into their own hands, shifting their recruitment focus to other European markets. City stalwarts like the independent investment bank Numis are proceeding with establishing their first European offices outside the UK.”

The shift in recruitment focus to the rest of Europe compounds the lacklustre picture in London continuing into Q2 with the capital on -7%, still lower than at any time during the Great Recession.

However, Gray remains optimistic: “While several financial services firms are moving some of their business out of the country, the inverse is also happening; over a thousand European financial services firms are planning to establish offices to continue to participate in the UK’s world leading markets. We also found that 41% of organisations hope to get employees back into workplaces permanently after the pandemic, so hubs like London will remain vital.”

While most sectors continue to languish in negative territory, the most positive data relates to Britain’s largest employers; after three negative quarters, a sense of real optimism has returned, and they have an Outlook of +15%. In contrast, micro, small and mid-sized employers remain in the doldrums, on -5%, -7% and -1% respectively. For the first time in 12 years, large employers are the only segment looking to hire in the next quarter.

Gray continues: “For the past 12 months many employers in the UK have rapidly accelerated digitisation. According to our data, large employers stand out in this regard – they plan to digitise more and are also hiring most while conversely, smaller organisations are more likely to have put digitisation plans on hold due to the pandemic and reduced hiring plans. In fact, 84% of UK employers that are automating plan to increase or maintain their headcount.

“We are seeing the emergence of a K-shaped recovery where some companies and industries are bouncing back faster and better while others are at risk of falling further behind. At the same time, the gap is widening between high- and low-skilled labour. It is more vital than ever that organisations close their skills gap by building talent through upskilling and reskilling their workforce to meet the rapid changes in demands and in the way we work.”

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