In an unexpected trend, the UK’s labour market has showcased resilience despite the economic challenges of a recession, as per the latest Robert Half Jobs Confidence Index (JCI).
The JCI, developed in collaboration with the Centre for Economics and Business Research (Cebr), indicates a robust job market with near-record-high worker confidence, challenging the prevailing economic narrative.
Amidst reports of a technical recession in Q4 2023, the JCI reveals that 56.1% of employees remain confident in their job security for the next six months. This confidence level has driven the job security pillar of the index to its second-highest level since its inception in 2009, reaching 138.4. Despite economic challenges, the labour market remains tight, supported by ongoing skills shortages and elevated job vacancies.
Real wage growth has marked a positive trend for the third consecutive quarter, outpacing headline inflation deceleration. The pay confidence pillar of the JCI has recorded significant gains, climbing 8.3 points to 36.8 by the end of the last year. This increased confidence is likely to fuel further demands for worker wages. However, concerns persist as the rate of input price inflation, influenced by rising salaries in the service sector, reaches its strongest point since August 2023, potentially impacting anticipated rate cuts.
A Recession Unlike Previous Downturns
Contrary to traditional economic downturns, the current recession, as analysed by Robert Half, appears to be shallow and potentially already over. Recent data indicates a lower-than-expected inflation rate of 4% in January, coupled with an improvement in consumer confidence. The private sector in Britain has exhibited robust growth, reaching its fastest rate in nine months.
Matt Weston, Senior Managing Director UK & Ireland at Robert Half, commented on the unexpected worker confidence amidst economic challenges. He highlighted the high employee mobility driven by a tight labour market and persistent skills shortages across various sectors. Weston acknowledged the impact of these trends on wage growth, emphasizing the need for a multi-layered approach to address economic inactivity and skills shortages for sustained business growth.
The apparent contradiction between economic indicators and worker confidence suggests a unique dynamic in the current labour market, challenging conventional expectations during a recession.
