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UK firms report strongest employment intentions since start of pandemic

LaToya Harding
·Contributor
·3-min read
A woman enters an employment centre in Leicester, central England, October 20, 2010. Britain will take an axe to its welfare state on Wednesday as part of an 80 billion-pound ($125 billion) cut in public spending that will dictate the future of of both the economy and the coalition government.  REUTERS/Darren Staples   (BRITAIN - Tags: EMPLOYMENT BUSINESS POLITICS)
Sectors that are indicating strong hiring intentions include healthcare, finance and insurance, education, and information and communications. However, this optimism does not extend to sectors that continue to be affected by the social distancing measures, such as hospitality. Photo: REUTERS/Darren Staples

Employers in the UK are reporting their strongest hiring intentions since the start of the COVID-19 outbreak.

According to the latest data from CIPD/Adecco’s Labour Market Outlook, the share of businesses planning to recruit is set to rise to 56% in the first quarter, pushing the UK economy close to its unemployment peak.

The survey of 2,000 employers, taken online between 5 and 30 January, showed that the net employment intentions figure - which measures the difference between the proportion of employers expecting to add jobs and those planning to cut positions - rose to +11 for the first three months of 2021 - its highest in a year. This compares to -1 in the previous quarter.

Over half of those surveyed indicated they are looking to recruit in the first quarter, up from 53% in the previous quarter and 49% six months ago. This is down from 66% during the same period last year.

Sectors that are indicating strong hiring intentions include healthcare, finance and insurance, education, and information and communications. However, this optimism does not extend to sectors that continue to be affected by the social distancing measures, such as hospitality.

Watch: UK unemployment rate soars to highest level in recent years

READ MORE: Coronavirus: Hospitality sector forecasts £73bn loss

The share of organisations planning to make redundancies in the first quarter fell from 30% to 20% compared with the previous quarter.

In the private sector, companies were more willing to maintain their workforce, with the number of employers planning redundancies dropping from 34% to 20%.

However, around a quarter of companies surveyed in the hospitality sector indicated they were prepared to reduce their headcount further in the first quarter.

The CIPD said employer confidence may be increasing due to a combination of factors, including the Brexit free trade agreement, the extension of the Coronavirus Job Retention Scheme to the end of April and the anticipation of economic recovery later this year.

“While these are encouraging signs for the labour market in the short term, the uncertainty of both future restrictions and government support beyond April could further test business confidence in the medium-term, the CIPD said.

“The CIPD is therefore urging the government to extend the Coronavirus Job Retention Scheme until at least the end of June to help support sectors most affected by the restrictions.”

READ MORE: Pubs and restaurants demand furlough extension in March Budget

At the end of last year, the UK government extended the Coronavirus Job Retention Scheme until 30 April 2021.

Employers can still claim for 80 per cent of an eligible employee's salary, capped at £2,500 per month in respect of hours not worked.

Alex Fleming, region president of Northern Europe at Adecco Workforce Solutions, said: “It is still positive to see some signs of labour market recovery, with a clear rise in net employment intentions.

“The furlough scheme and redeployment have enabled many organisations to avoid redundancies during the pandemic, and as we continue to transition into the new era of work, government support will remain a key factor in helping to minimise any further jobs fallout.

Investing in reskilling and upskilling will also remain an important tactic in future proofing the workforce.”

Watch: What UK government COVID-19 support is available?