UK employers determined to keep hiring in battle to retain talent, survey says

In the context of high inflation and an economic downturn, UK employers have signalled they are determined to keep hiring in the New Year, with the Net Employment Outlook remaining positive at +19 per cent for Q1 2023, according to the latest survey from ManpowerGroup.

The survey is based on responses from 2,030 UK employers and asks whether they intend to hire additional workers, maintain current headcount, or reduce the size of their workforce in the coming quarter (January to March 2023).

Although UK employers stated an intention to keep hiring at pace to maintain productivity and business as usual, the latest Outlook marks a decline of five percentage points on the fourth quarter of 2022. With a stretched and tightened labour market to contend with, retaining skilled talent will be a key priority for many organisations.

"Talent retention is going to be a battle for most employers this year," said Chris Gray, director at ManpowerGroup UK. “We’re seeing hiring cool for the third quarter running, but the demand for skilled talent is still outstripping supply, meaning employee choice over their working conditions and workplace remains high, resulting in job-hopping for better skills training and benefits.

“This situation can be likened to a leaky bucket – employers have to keep hiring at pace just to maintain position and not lose out amidst an ongoing skills shortage.

“Where skills are in short supply, productivity is the first thing to fall. We’re seeing upskilling become increasingly important to employees, so investment is critical if employers want to retain talent and also boost their employees’ productivity.”

The IT sector leads the pack with a Net Employment Outlook of +34 per cent (level with the last quarter), with 80 per cent of IT firms struggling to find talent and 58 per cent of tech firms reporting that IT and data skills are the most difficult to find. Employers across all industries report that IT skills are in shortest supply.

However, data collected by ManpowerGroup’s IT specialist brand Experis has shown that 27 per cent of UK adults wish they worked in the IT sector, with 23 per cent saying they would consider taking courses to retrain and move into the industry.

Gray said: “Despite prominent news coverage of tech firms laying off staff, the IT industry is still struggling to find skilled talent more than any other sector. Demand for tech skills is outstripping supply, even though the data tells us there is great enthusiasm for working in tech if the skills training is available. Employers need to provide upskilling and reskilling opportunities to attract and retain the best talent.”

The finance and real estate sector reported a Net Employment Outlook of +18 per cent, a decline of 22 percentage points on last quarter and down 26 percentage points year-on-year. Despite the sharp decline, hiring levels remain very positive as the sector returns to business as usual. However, 80 per cent of employers in this sector are struggling to find skilled talent – the most of any sector.

“The finance sector is struggling more than most to retain skilled talent,” Gray said. “There is a long-standing challenge with reskilling in the sector. Firms are having to hire at higher-than-average rates to bring in new talent because there aren’t sufficient reskilling and upskilling opportunities to provide high-value employees with high-demand skills, resulting in attrition. We’re especially seeing younger employees leaving the sector because they lack mentor figures and upskilling opportunities.”

The Net Employment Outlook for all UK regions remains positive, with hiring plans above the national average in London with an Outlook of +24 per cent, although this is still a decline of four percentage points on the previous quarter and down by 18 percentage points year-on-year. Hiring confidence is strongest amongst employers in the North East (+27 per cent) and the weakest in Yorkshire & Humberside (+4 per cent).

The ‘Net Employment Outlook’ is calculated by subtracting those employers who plan to reduce staffing levels from those who plan to hire staff. A positive result indicates that more employers plan to increase rather than decrease staffing levels; a negative result reflects the opposite.

ManpowerGroup's quarterly Employment Outlook Survey is the longest-running, most extensive, forward-looking employment survey in the world, polling 40,700 employers across 41 countries and territories. The survey serves as a bellwether of labour market trends and activities and is regularly used to inform the Bank of England’s inflation reports, as well as by the UK government, and also serving as a regular data source for the European Commission.