Labour hoarding is becoming prevalent in the UK as employers increasingly aim to retain staff in light of ongoing economic uncertainty and growing skills shortages, according to specialist recruitment business Robert Half.

The trend highlights the difficulties businesses face due to a lack of specialist talent and sustained economic unpredictability, influenced by factors such as interest rate instability and an impending general election.

The latest Robert Half Jobs Confidence Index (JCI), an economic confidence tracker developed in partnership with the Centre for Economics and Business Research (Cebr), reveals a notable rise in worker confidence. The JCI now stands at 46.3, marking a 6.6-point increase quarter-on-quarter in Q1. This is the 14th consecutive quarter the JCI has remained in positive territory, indicating confidence levels above expectations despite declining vacancy numbers.

Job Security at Record Levels

Job security has reached its highest level since the JCI research began in Q1 2009, with 60% of workers feeling confident in their current job prospects over the next six months. The job search and progression confidence pillar experienced the most significant quarterly gain, rising by 20.6 points to 23.5 in Q1. Overall, 46% of survey respondents reported feeling confident or very confident about their future career prospects and ability to progress in their roles over the next five years, up from 40% last quarter.

Macroeconomic confidence also saw an improvement for the second consecutive quarter, increasing by 9.9 points. However, pay confidence was the only pillar to fall, dropping into negative territory at -10.9, down from 11.6 in Q4 of the previous year.

Matt Weston, Senior Managing Director UK & Ireland at Robert Half, commented on the findings: “We’re seeing a changing relationship between economic growth and the labour market. Historically, unemployment rises when demand is low and vice versa. We’re just out of a recession and have experienced over a decade of meagre economic growth. Despite this, job confidence remains high and the labour market remains tight.”

Labour Hoarding as a Strategic Response

Weston further explained that skills shortages are driving labour hoarding. “Exacerbated by skills shortages, labour hoarding is among the core drivers of this. Employers are recognising that if they can’t source the talent they need when the economy is weak, they will have less chance when it bounces back, particularly with the ongoing skills shortages being felt across the globe. As such, they’re doing their best to retain workers and limit the impact on already low productivity rates.”

The trend of labour hoarding reflects a strategic shift by businesses in response to economic challenges and talent shortages. As companies navigate these complexities, the emphasis on retention highlights the importance of maintaining a skilled workforce to ensure stability and future growth. For more insights and detailed analysis, visit the Robert Half website and explore the latest Jobs Confidence Index report.