The immediate aftermath of Brexit may be “the calm before the storm” on jobs, according to a a report by ManpowerGroup.
It shows that while UK job prospects have held firm so far, “cracks in the ice are appearing” with six out of nine sectors surveyed reporting a fall in jobs optimism.
The survey, based on responses from 2,102 UK employers, asks whether employers intend to hire additional workers or reduce the size of their workforce in the coming quarter. It is the most comprehensive, forward-looking employment survey of its kind and is used as a key economic statistic by both the Bank of England and the UK Government.
Mark Cahill, ManpowerGroup UK Managing Director: “After the initial shock of Brexit, we’re entering a new phase of prolonged economic uncertainty. The future of freedom of movement across the EU is of particular concern. As UK businesses are reliant on European talent to help fill the skills gap, we urge the government to prioritise maintaining the free movement of people across the EU during its negotiations. This would make sure the UK remains competitive, while sending a powerful message to skilled jobseekers – Britain remains open for business.”
Manpower says the biggest cause for concern is across three industries which it calls “vital to Britain’s long-term prospects”. Business and finance services, construction and utilities all reported four point falls in employer optimism. Manufacturing fell two points despite the weak pound and is at its weakest level in three years.
Cahill added: “Many finance operations in the City of London depend on the EU ‘banking passport’ and the fall in hiring intentions could reflect pessimism over the future of this agreement. We’ve already seen London’s competitors like Paris and Frankfurt making overtures to the City’s big finance firms. In addition, we’ve seen an 800% rise in applications for finance positions in Dublin since the Brexit vote.”
ManpowerGroup’s research also reveals that public sector hiring sentiment has fallen to its weakest level in more than four years.
Cahill says: “The public sector accounts for almost 10% of employment across the country and a fall of this magnitude would have a damaging effect on frontline services. The government must also prioritise infrastructure investment in the upcoming Autumn Statement to provide a much-needed boost to the construction industry and to businesses in regions hamstrung by aging transport links.”
Meanwhile, Manpower says the fall in sterling following the referendum has had a positive impact on the retail, wholesale and hospitality sector, but it says that “while retail sales are a key factor driving this quarter’s +5% Net Employment Outlook, it is too early for a victory lap”.
Cahill states: “For now, people are still spending, meaning retail job prospects remain positive for UK workers. But this looks like a short-term feel good factor that may fall away after the busy summer period and ramp up to Black Friday. The British tourism industry boomed this summer, boosted by the decline in the pound, which may have helped overcome the initial shock to the UK economy. However, over time the weaker sterling could push up the price of imported goods and reduce overall consumer spending power. People returning from foreign holidays have already felt the sharp end of the pound’s devaluation.”