After a turbulent 2016, the next 12 months are set to prove even more challenging for the UK Government and businesses as the key issues of Brexit, the gig economy, pay and productivity will continue to dominate the labour market, according to annual labour market predictions released by the Chartered Institute of Personnel and Development (CIPD), the UK’s professional body for HR and people development.

Ian Brinkley, acting chief economist, anticipates slower economic growth, a modest rise in unemployment, fewer new jobs and downward pressure on pay as the UK continues to suffer from low productivity and continued uncertainty about its Brexit arrangement.

“The Brexit vote didn’t cause the economy to fall off a cliff edge in 2016, but there’s been a clear loss of confidence in international markets signalled by the fall in the pound and slowing inward investment”, Brinkley said.

“The single biggest thing that the Government could do to help in 2017 would be to give businesses greater certainty over the direction of travel, the residence status of migrants already in the country and the likely extent of restrictions on new flows of migrants”, he said. “Very few employers want a ‘hard’ Brexit and the government must consider this when planning its strategy for both the final arrangement and the transition towards it. We simply cannot afford for businesses to live in limbo.”

Brinkley’s prognosis for UK labour market in 2017 is fairly bleak; with slower economic growth, increased unemployment, fewer new jobs and a lack of pay rises for most. Overall, employment stopped growing between May and October 2016 and this trend of very weak job growth is expected to continue into 2017, according to Brinkley. He also predicts a modest increase in unemployment with fewer new jobs — possibly as few as 100,000 — being created throughout the year.

The CIPD’s latest Labour Market Outlook also found that 38% of employers think it will be harder to recruit EU workers in the year ahead, and 28% have concerns that their current migrant workers may wish to leave the UK.

The report also address the gig economy. The UK has a high share of permanent work and a high share of good-quality jobs by international standards, but 2016 was marred by stories of poor employment practices, particularly amongst certain high street retailers and employers engaged in the gig economy, with the use of agency workers and the employment status and rights of people involved in different forms of atypical working coming under the spotlight.

The report is available online.