Employer confidence for the fourth quarter of 2019 showed improvement as demand for labour remains high, according to the latest Labour Market Outlook report from the Chartered Institute of Personnel and Development and The Adecco Group.

The net employment score, which is the difference between the proportion of employers expecting to increase or decrease staff levels, increased from +18 to +22.

According to the report, while uncertainty around the previous Brexit deadline of 31 October intensified throughout the quarter, businesses expressed an intention to take a business as usual approach to staff resourcing. 

The net employment score was highest in construction (+38), administrative and support service activities and other service activities (+30) and healthcare (+30).

Meanwhile, a number of employers have reported hiring difficulties due to an increasingly tight labour market. Just over two-in-five (43%) of the employers recorded that it’s become more difficult to fill vacancies over the last 12-months.  The majority, or 67%, of the organisations currently hiring report that at least some of these vacancies are proving hard-to-fill.

Public sector employers in particular recorded recruitment difficulties. In healthcare, 75% of hiring employers recorded hard-to-fill vacancies. In public administration and defence this was 71%. 

The report also showed that basic pay expectations for the next 12 months to August 2020 remain at 2%. Expectations in the public sector trended upwards, rising from 1.5% to 2%. However, in the private sector expectations dropped slightly, decreasing from 2.5% last quarter to 2.2%, therefore closing the gap between the sectors.

Inflation remained the most common reason for pay increases above 2%. Other top reasons included movement in market rates and in response to recruitment and retention difficulties.

Alex Fleming, Country Head and President of Staffing and Solutions, the Adecco Group UK and Ireland, said the clarity of a confirmed date for Brexit at the time of data collection ‘has no doubt influenced the sentiment reflected in the report’.

“The Labour Market Outlook’s measure of employment confidence score has fluctuated between +15 and +22 since the June 2016 referendum and remains at its highest post-referendum level,” Fleming said. “With the Brexit deadline postponed once again, we might expect to see greater fluctuation by our Q1 2020 Labour Market Outlook. Although 86% of companies are planning pay reviews in the next 12 months, uncertainty about future access to the EU market influenced only 22% of companies’ decisions to consider low pay rises below 2%. Businesses are playing a waiting game, steadying the ship while politics plays out.