Expert warns Bank of England announcement won’t alleviate labour market pressures

With commentators predicting that interest rates will remain the same in today’s Bank of England announcement, specialist recruitment firm, Robert Half, has warned that with candidate confidence largely unaffected by economic trends so far this year, the labour market will remain tight as we head into 2024.

According to the firm’s latest Jobs Confidence Index (JCI) – an economic confidence tracker produced in partnership with the Centre for Economics and Business Research (Cebr) – despite signs that pay increases have peaked, more than half of workers in the UK (58.4%) feel confident in their job security for the next six months. This figure has remained largely unchanged throughout each iteration of the JCI in 2023, despite previous changes in inflation rates.

As Matt Weston, Senior Managing Director UK & Ireland, at Robert Half, explains, the skills shortages that are still growing could turn the dial in any direction in the New Year:

“Our research shows that job and business growth confidence is on the rise regardless of interest rates, and the widespread skills shortages and economic inactivity levels will take much longer to tackle. Employers are less likely to be in the driving seat in 2024 and being agile with their talent strategies and workforce models will be key.

“Latest figures show labour market tightness remains while economic inactivity continues to be a key challenge. In his Autumn statement, the Chancellor announced the Back to Work Plan, aiming to support the long-term unemployed get back into employment by focusing on the way people interact with the benefits system. A further £50 million of funding over the next two years was also pledged to increase apprenticeships in growth sectors experiencing skills shortages. Although such initiatives are much welcomed, more needs to be done to tackle the widespread systemic skills shortages.

“Today’s labour market snapshot is the culmination of systemic factors, such as the steady influx of workers in years past. Things have changed for good and accessing the skilled talent businesses need to remain competitive is becoming ever more challenging. Increased post-pandemic economic inactivity, innovation outpacing traditional learning routes, and limited social mobility all have the potential to further weaken the labour market’s ability to match jobs with skilled workers.”

Featured Photo by Christopher Bill on Unsplash.

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