Scotland jobs market slips into negative territory

ManpowerGroup Employment Outlook Survey reveals increasingly pessimistic employers in Scotland

Against the backdrop of Brexit uncertainty, lower-than-expected economic growth and falling consumer confidence, employers in Scotland are becoming more cautious about hiring, according to ManpowerGroup, the world’s workforce experts. Scotland fell five points from previous quarter, to -2 per cent, the lowest scoring region, along with Northern Ireland.

The Manpower Employment Outlook Survey is based on responses from 2,107 UK employers. It asks whether employers intend to hire additional workers or reduce the size of their workforce in the coming quarter. It is the most comprehensive, forward-looking employment survey of its kind and is used as a key economic statistic by both the Bank of England and the UK Government.

Jason Greaves, operations director at Manpower, said: ‘Hiring confidence in Scotland has hit its least confident level in over a year and we are seeing a slowdown across a variety of sectors. It is not all doom and glook – we are seeing demand for contact centre and technical roles and these present some great opportunities for candidates with customer service and sales skills. Those with foreign language skills and IT skills are in particular demand. But many employers are cautious about their hiring plans taking longer to make hiring decisions.

‘Despite this quarter’s dip into negative territory, there are events in the pipeline that give us confidence about the longer term health of the Scottish jobs market. ABP’s redevelopment of its Perth meat processing plant will lead to growth and job creation in the region, with around 80 jobs expected to be created following a £4m government grant under the Food Processing, Marketing and Cooperation scheme. We are watching these events closely.’ In comparison, the UK outlook of +4 per cent equals the most downbeat hiring prospects since 2012. The outlook has been dragged down by a fall in hiring confidence in the finance and business services sector, which has plummeted to a nine-year low of -1 per cent.

James Hick, managing director for ManpowerGroup Enterprise, said: ‘This is the first quarter since 2009 – when Britain was in the depths of the financial crisis – that we’ve seen business and financial services employers record a negative outlook. As the UK is a global centre for financial and professional services, if the sector’s shrinking, it’s not good news for UK plc. While financial services only employ 3.5 per cent of workers, it generates about 11 per cent of government tax receipts. Technological innovations mean banks are now more automated, and we’ve already seen branch closures announced by the likes of RBS and Lloyds, which will cause significant job losses.’

Hick added: ‘The business services sector is also hugely important to the UK’s economy, accounting for £186 billion (11 per cent) of the UK’s total goods and services produced and employing 4.6 million people – 13 per cent of the UK’s total workforce – in a range of businesses comprising everything from outsourcing companies and estate agents to law firms and accountants. We have seen countless negative headlines about the sector recently, and these are undoubtedly hitting hiring intentions. The shockwaves from Carillion’s collapse are still being felt, and outsourcing company Capita recently carried out an emergency £700m rights issue to pay down its debts and provide some much-needed investment. Elsewhere, the big professional services firms are facing an even greater fight for international talent in the face of Brexit, while the lacklustre property market and increased online competition has hit estate agents such as Countrywide and Foxtons.’

In a gloomy quarter, manufacturing is a particular bright spot. Its outlook has increased to +7 per cent, and the sector has typically out-performed the national outlook over the last year. Hick said: ‘The weak pound may be bad news for UK holidaymakers, but it’s proving to be good news for British factories exporting overseas. Some British manufacturers have even been investing in expansion to cope with strong demand. Dairy Crest, the company behind the mature cheddar brands Cathedral City and Davidstow, recently announced plans to invest £85m in the expansion of its cheese factory in Cornwall, with a focus on expanding production to meet growing demand in markets as far afield as the US, China and the Far East.’

Despite the large contribution of business and financial services, London is holding up, in line with the national outlook of +4 per cent. Yorkshire and the Humber employer hiring confidence has swung from being the least upbeat region to being one of the most optimistic, now at +8 per cent, a seven point increase. The biggest faller this quarter is the West Midlands, down ten points from +9 per cent to -1 per cent, the region’s first negative outlook since 2012. Employer confidence in the East Midlands is also easing and is now +6 per cent, from +10 per cent last quarter. A picture of declining confidence across the middle of the country is completed by the East of England, with the outlook at +1 per cent, a nine point drop quarter on quarter, its lowest level in a year. Wales is down one point to +3 per cent.