Strict employment legislation and excessive red tape is restricting recruitment activity in certain business sectors, says professional staffing agency Barclay Meade.
The company’s latest quarterly ‘Tracking UK Recruitment’ report reveals the rate of hiring among UK medium and large organisations dropped significantly in the second quarter of 2012 amid the lowest levels of business confidence for two years.
However, in line with calls from employers to be given greater freedom to fulfil recruitment plans, the company believes swift Government intervention could make a significant difference to hiring activity and business confidence.
With the Office for National Statistics revealing the UK slipped deeper in to recession in Q2, optimism among business owners is clearly waning, with just 18% of firms reporting they are more positive about recruitment now than in the previous quarter.
Nearly 3 in 5 (58%) firms are calling for the Government to relax employment legislation in order to fulfil labour solutions that support the growth of their business. The majority (54%) of business owners agree with the controversial proposals in Adrian Beecroft’s Government commissioned report in to Britain’s employment laws, which recommend employers are given greater freedom to dismiss workers. Only 23% of businesses disagreed with the proposals.
Looking forward, just 41% of business owners are optimistic about the UK economy, the lowest level since the tracker began in Q3 2010.
Despite the bright start to the year, which saw the number of firms with a recruitment freeze fall for the first time since Q1 2011, down to 13%, hiring has tailed off again in Q2 as 22% of firms report freezing recruitment.
The report by Barclay Meade – part of the AIM-listed recruitment business Matchtech Group PLC –reveals the number of organisations hiring at pre-recession (2007) levels dropped by 10% over the past three months, down from 57% to 47%.
However, business confidence may not be the only reason behind this slump, as firms are continuing to report their frustration at the lack of availability of skilled candidates – 47% said it was a major barrier to recruitment, with a further 42% saying candidates were often better on paper than in practice.
Nigel Lynn, managing director at Barclay Meade, says: “Following news from the ONS that the UK slipped deeper into recession in Q2, businesses have seemingly reduced their hiring activity amid fears over future prospects.
“With this in mind, we must begin to consider the potential long-term impact on the recruitment market as we are already seeing signs of permanent, significant changes to the way we are employed as a nation.
“The construction and financial services sectors remain subdued which is contributing to the poor employment figures, weak GDP output and lower levels of business confidence. However, in sectors such as automotive and oil and gas, where high-skilled candidates are in particular demand, there are pockets of sustained growth.
“Generally the UK jobs market remains very fluid and changeable at short notice. While we have seen an increase in the number of organisations with a freeze on recruitment, it is often introduced as a temporary measure, lasting for much shorter periods than three to five years ago.
“Encouragingly, we are also seeing an increase in recruitment for permanent and fixed-term contracts, as employers avoid hiring temporary staff as a cost-saving measure.
“The Government should be now be focusing on easing red tape for businesses, including relaxing employment legislation, which would help stimulate hiring activity if supported by greater periods of sustained economic prosperity.
“Business confidence remains key to the future of the UK recruitment landscape and so we must hope that pockets of industrial growth can spread more widely across the sectors during the next two quarters – a period which will be crucial in determining the long-term economic prospects for the UK.”