One in four employers are planning to hire staff in the coming months despite a slump in business confidence, new research shows.
The Recruitment & Employment Confederation (Rec) said the “fundamentals” of the labour market were strong, with employment at a record high.
Skills shortages will only get worse if the supply of skilled EU workers is in any way curtailedKevin Green
But a survey of 600 employers confirmed an ongoing shortage of skilled workers amid concerns about what will happen to migrant labour following the EU referendum result.
Permanent and temporary vacancies in engineering, construction, health and social care are particularly difficult to fill due to a shortage of suitable candidates, the study found.
More than a quarter of public sector employers have made redundancies in the last year, compared to 16% private sector firms. The survey also revealed that business confidence has weakened since the EU referendum.
Rec chief executive Kevin Green said: “Thanks to a resilient business-as-usual attitude from consumers since the referendum, demand on businesses has remained buoyant and this is reflected in employers saying they will actively expand their workforces in the coming months.
“This is good news, but there are question marks around the sustainability of positive trends we have seen since the referendum. Skills shortages are a major problem in many sectors, one that will only get worse if the supply of skilled EU workers is in any way curtailed.
“Employer confidence has fallen significantly, suggesting that while businesses continue to perform well, there is much anxiety about what the future holds.”
The Rec survey came as the UK government was urged not to rush through a “clumsy” Brexit plan amid calls for manufacturers to retain access to the single market.
Protecting industry will be “critical” in the negotiations to leave the EU and firms must continue to be able to employ workers from other European countries, said the EEF trade body.
A survey of 2,000 members of the public by the manufacturers’ group found that only 5 per cent believed that damaging the sector was a price worth paying for leaving the EU.
The EEF urged ministers to “hold their nerve” and work out a plan to help manufacturing companies cope with life outside the EU, adding that there could be opportunities to trade with other countries post-Brexit.
Chief executive Terry Scuoler said: “Rushing through a clumsy Brexit is not in the interests of our sector or the wider UK economy. The Prime Minister is right to hold her nerve and to allow adequate time for the UK’s negotiation strategy to be developed in close consultation with business to ensure the UK’s long-term economic interests are not harmed.
“Manufacturers see great opportunity for jobs, growth and wealth generation from the expansion of global trade outside of the EU. The negotiations will inevitably require compromise, but manufacturing has a key role to play in the success of post-Brexit Britain.
“I would urge the Prime Minister to ensure that any new relationship works for our sector. This means maintaining unrestricted access to the single market and ensuring companies have the ability to hire and post employees across the EU - albeit with more controls in place.”
Rob Elvin, of law firm Squire Patton Boggs, which helped with the report, added: “While our ability to trade freely with Europe is naturally of immediate concern to UK manufacturers, Brexit has provided an opportunity to create a longer term vision for international trade.”