The latest JobsOutlook survey from the Recruitment & Employment Confederation reveals that UK employer confidence fell during the last quarter, but also suggests that businesses are holding back from making cuts to their workforce.    

The data showed that 24% of employers indicated that they would take on more permanent staff in the next three months, while 64% said they would maintain their existing headcount. Furthermore, 3% of employers expect to shrink their permanent workforce within the next three months.

Survey data also shows that just under half of all employers (45%) stated that at least 1% of temporary workers became permanent each year in the three months to July. The temporary-to-permanent route remains a key hiring approach for the economy. For around three in ten employers, the transfer is significant in volume, with a figure of 20% or more workers moving on to permanent employment each year.

Meanwhile, 26% of SMEs said they would take on more permanent staff and 12% predict that their temporary staff base will increase in the short term.   

“It’s not surprising that confidence took a knock following the referendum result, but there are reasons to be cautiously optimistic,” REC Chief Executive Kevin Green said. “SMEs are the lifeblood of our economy and it’s encouraging to see that hiring intentions remain strong within this group, suggesting they have taken the referendum result in their stride.”

Despite this, the hiring data, survey also reveals how confidence has deteriorated in recent months. In July, 21% of UK employers reported feeling more confident about economic conditions, down from 45% in June and 51% in May.

Confidence has also fallen month-on-month around hiring and investment decisions. In May, 47% of employers expected their organisations to become more confident when hiring. In June this fell to 39% and in July to 25%.

“In general employers have avoided knee-jerk reactions to staffing and this ‘business-as-usual’ approach bodes well for the UK jobs market in the next few months. Recruiters tell us that while their clients are taking longer to confirm permanent appointments, vacancies have continued to grow since the referendum. As business continues to do its bit we now need government to show the same level-headedness to restore economic confidence,” Green said.

The survey also shows that 24% of public sector organisations have made redundancies in the last 12 months.

“Public sector organisations have been under pressure to reduce costs for some time, and with the easy savings having already been made we’re now seeing some redundancies,” Green said. “It’s likely that this will feed through into poorer levels of service. At a time when schools and hospitals are already struggling to perform, this situation doesn’t seem sustainable in the long term.”