Although the UK slipped into technical recession at the end of last, following two successive quarters of negative growth, we have since seen a rebound at the start of 2024, with the latest ONS figures revealing a 0.2% GDP uptick in January.

Despite a cooling of the jobs market and a fall in vacancies, our Jobs Confidence Index (JCI) increased to 46.5 in the final quarter of 2023, which clearly indicates that job seekers remain bullish about their career and wage prospects. But how will this current worker sentiment play out and impact employers looking to attract and retain top talent?
 

The latest results from the JCI, which is produced in partnership with the Centre for Economics and Business Research (Cebr), found that over half (56.1%) of job seekers remain confident about their job security during the first six months of this year.

In fact, such is the level of optimism that the job confidence pillar (138.4) is at its second highest level ever, while pay and macroeconomic confidence indicators were also up. For context, any figure over 30 is considered positive territory. Although the fall in the job search and progression confidence pillar was the highest on record, it remained in positive territory and above the long-term average.

UK Economy Expected to Turn the Corner in 2024

Indeed, the findings might seem anomalous given the cost of living crisis, still high interest rates and a sluggish, stagnant economy. So, what is driving this surprising surge in confidence?

There are a number of factors to consider. Job vacancies remain higher than pre-pandemic levels, and consumer price inflation (CPI) is falling sharply, with the rise in real wages easing the financial burden on households. The unemployment rate is also very low historically and interest rates are likely to come down soon, which will stimulate economic growth. It is easy to see why such optimism prevails.

While job seekers remain confident about their job security and pay prospects over the coming year, let us consider job search and progression for a moment, the one pillar that has taken a hit. What’s particularly of note here is that despite the decrease in this pillar, 4 in 10 respondents were either ‘confident’ or ‘very confident’ about their career prospects in the next five years – only 12% remained pessimistic. Difficult trading conditions, forcing some employers to reduce the hours of their workers, have led to a small increase in the number of involuntary part-time work, which has also contributed to the fall in this indicator.

Clearly, job seekers feel that the future is bright for their careers and anticipate that the UK economy will bounce back and return to more respectable levels of growth in the near to mid-term, potentially banishing the troubles that many experienced in the aftermath of the pandemic once and for all. Interestingly, consumer confidence rose in contrast to worsening business optimism, albeit the macroeconomic confidence indicator stayed in positive territory. That said, if interest rates fall as expected, this will inevitably restore business confidence as the economy gets back on the road to recovery.

Skill Shortages Accelerating Talent Demand and Wage Growth

Ongoing skill shortages, which are affecting so many industry sectors, are also fuelling this confidence while causing employers and hiring managers no end of challenges. Those candidates who possess the right in-demand skills know that there are plenty of roles out there and that they can command higher salaries by moving or accepting improved counter offers by staying. The fact that the economic inactivity rate, which has been impacted negatively by record numbers of long-term sicknesses, is up year-on-year and still above pre-pandemic levels has not helped organizations either.

Despite the inflationary fears sparked by wage growth, the current reality for employers is that salary remains a major lever in attracting and retaining staff. The CPI may have fallen, but the cost of living crisis is still biting hard with utility, food and other bills still extremely high. Employers must leverage their employer brands and provide perks to help improve living standards, for example, offering subsidized or free food and travel as well as other popular benefits such as gym memberships. Hybrid working and flexibility remain high on the list of desirables for job seekers and firms should capitalize on this while they still can.

Unlike skilled workers, confidence is certainly not in short supply, as evidenced by the findings of our latest JCI. Whether we are looking at job security, pay or the outlook for the future, job seekers remain optimistic about their prospects and that of the UK economy, in part driven by acute skill shortages. Businesses, for their part, will have to focus on their employee value propositions (EVPs) to entice job seekers while at the same time providing ample training and development opportunities, particularly in tech and AI (artificial intelligence), to boost engagement and retain their existing workers.

For job seekers, at least, prospects appear bright. But for employers and HR (human resources) teams, it is a complex time to attract and retain talent.

Author Bio

Erin Sutherland leads the Robert Half HR Recruitment Practice as Senior Talent Solutions Manager in the London region.

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