Figures from the last decade speak to an alarming truth for the future of the UK economy. On one level, the UK has enjoyed unprecedented high rates of employment and low rates of unemployment. Yet on another level, the economy has been impaired by stagnation and erosion of output. This, in turn, has pushed prices up with CPI inflation rising to 3.1% in November 2017 – the highest in nearly six years.

As the productivity gap between the UK and the rest of the G7 remains substantial, whatever factors stalled productivity growth in the wake of the 2008 financial crisis appear to be a less convincing explanation for the persistently weak performance.

UK employment rates alone are not indicative of the overall economic conditions nor of hiring and investment decisions. As uncertainty brought about by the EU referendum shock and ongoing Brexit negotiations creeps in, productivity is further hindered by deteriorating employers’ confidence in the economy, as revealed in the REC’s December 2017 JobsOutlook report.

In particular, 33% of employers surveyed in September-November 2017 believe economic conditions are worsening while 25% believe they are improving. Following a downward spiral since June 2016, the net balance (-9) for this period is the joint lowest on record. Confidence in making hiring and investment decisions also fell by three points to +11.

The UK is faced with a declining availability of candidates and an emergent mismatch of skills. A drop in net migration from the EU in recent months has exacerbated the adverse impact of a progressively shrinking workforce in the UK.

The REC’s January 2018 ‘Report on Jobs’ reported a further steep drop in both permanent and temporary candidate supply during December 2017. At the same time, insufficient investment in infrastructure, new technology, education and training is severely impeding productivity however hard employees work.

A healthy, high-performing jobs market rests on the quality, skills and aspirations of its workforce. The recruitment industry has a vital role to play in addressing heightened business concerns over the UK’s economic outlook and bridging the gap between persistently low productivity and labour market practices.

By focusing on the skills and quality of the UK workforce and ensuring professional and robust practices to secure and invest in new recruits, the industry will support businesses in planning their workforce effectively and increasing productivity so that the UK economy can recover and flourish.

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