Last reviewed 22 April 2022

With inflation reaching its highest level for 30 years, employers’ confidence in the UK economy took a turn for the worse during the first quarter (Q1) of 2022 according to new data from the Recruitment and Employment Confederation (REC).

The REC’s measure of business confidence in the economy improved slightly at the beginning of the year but then fell back to net -11 in the three months January to March, the same level as in Q4 of 2021 (October-December).

Despite this, more employers remained positive than negative about their ability to hire. The REC’s JobsOutlook survey found that UK businesses’ confidence in hiring was at net +8 in Q1 2022. This was one percentage point lower than in the last quarter of 2021.

REC chief executive Neil Carberry said: “Businesses are seeing tax rates and uncapped energy costs rise, as well as pressure on salaries from staff who are seeing their own bills go up. So it is no surprise that firms are more concerned about the outlook. But British firms are resilient and investment in staff and growth remain on the agenda when employers think about their own business.”

Although temporary workers remain vital to managing uncertain and fast-changing markets, he highlighted that more employers are switching their hiring intentions towards permanent staff, as the urgent need for contingency staff to cover Covid absences decreases.

Hiring intentions for permanent staff in the short term increased by nine percentage points to net +28, quarter-on-quarter. Medium-term hiring intentions also rose by seven points to net +26.

Comment by Kate Palmer, HR Advice and Consultancy Director at Peninsula

The hiring of permanent staff can be beneficial for both employees and employers. Organisations’ reap the rewards of improved loyalty and productivity, whilst employees enjoy the security associated with long-term employment.

Businesses may need to review their recruitment strategies to ensure they are attracting permanent employees in the best possible way. It’s likely the tactics they used to appeal to temporary staff will differ from that needed to optimise the recruitment of permanent team members.