Did Brexit Send the UK Job Market into Freefall?

Did Brexit Send the UK Job Market into Freefall?

The shock outcome of June’s Brexit referendum was widely expected to have a dramatic impact on the UK labor market, but the market has been sending mixed signals. In the immediate aftermath of the vote, many employers froze hiring and many employees began looking for work outside the UK, while CEB’s TalentNeuron detected a sharp drop in listed job openings. Employees have also expressed anxiety about their futures. On the other hand, a Totaljobs study released last week found that most employers did not anticipate putting off hiring plans or freezing recruitment.

The latest data, however, are not encouraging. A survey released on Friday suggested that hiring for permanent positions fell last month at the fastest pace since May 2009, Reuters reports:

The monthly report from the Recruitment and Employment Confederation (REC) showed starting salaries for permanent jobs rose in July at the slowest pace in more than three years. Overall, the survey added to evidence that business confidence and activity slowed sharply after the June 23 vote to leave the European [Union].

“The UK jobs market suffered a dramatic freefall in July, with permanent hiring dropping to levels not seen since the recession of 2009,” said REC chief executive Kevin Green. “Economic turbulence following the vote to leave the EU is undoubtedly the root cause.” The survey suggested businesses were focusing more on hiring short-term staff because of the uncertainty.

The CIPD has been hearing a similar story from employers, Sophie-Marie Odum adds:

The drop in permanent hiring has also been noticed by HR recruiters. Clare Thornton, partner at HR specialist Frazer Jones, said: “During July, we saw some slowdown in permanent appointments because of organisations having been cautious in May and June, awaiting the outcome of the Brexit vote. However, despite uncertainty on the practical outcomes for business post referendum, the market has rebounded strongly in July and we are confident that August and September figures for new appointments will look very different.

“We also have the seasonal impact of the summer, which makes it is very hard to know the true impact of Brexit. To date, however, a large number of our clients are operating ‘business as usual’ and haven’t altered their plans for recruitment in the second half of the year. We would describe the outlook of many of our clients as cautious but positive.”

But the REC is reluctant to interpret this data as conclusive:

Green said it was important not to jump to conclusions: “The truth is, we don’t know what long-term [effects] the referendum result will have on UK jobs; with the political situation becoming more stable and the Bank of England making sensible decisions, we may well see confidence return to the jobs market more quickly than anticipated.”