Skip to main content


The first half of this year has brought much transformation within the UK labour market

With inflation (driven significantly by high energy prices) reaching record highs- it hit 9.4% in June in the UK, a 40-year high- and supply chains struggling to allow industries to meet demand, the expectations for economic growth have been revised downward.

In its June 2022 “Global Economics Intelligence Economic Summary” McKinsey reports that the World Bank reduced its GDP growth forecast for 2022 from 4.1% (its January forecast) to 2.9%.

In the UK, Andrew Bailey, the Governor of the Bank of England, has raised the potential for UK interest rates to rise by 50 basis points in early August, stating that it was the Bank’s absolute priority to bring inflation back to the 2% target.

Added to this picture is the sudden scramble to replace Boris Johnson as leader of the Conservative Party and new Prime Minister.

Has the hiring spike in the UK labour market peaked?

This macro picture inevitably has begun to have an effect on the buoyancy of the recruitment sector. Office of National Statistics figures in June 2022 showed that job numbers were beginning to decelerate with a decline of 55% between March and April 2022, and application numbers were also declining.

More grist was added to this mill with the release of the KPMG and REC UK Report on Jobs in early July, which confirmed both a material slowing down in the growth of permanent placements and the expansion of vacancies at the softest rate for over a year.

Commenting on the Report, Neil Carberry, CEO at the REC, observed:

“The labour market is still strong with demand for new staff high. That said, today’s data show that we are likely to be past the peak of the post-pandemic hiring spree.”


The possible ending of the post-pandemic hiring spree signalled above stands in contrast to what was a booming first few months of the year for the sector despite the uncertainty caused by the presence of the omicron variant and also the outbreak of the war in Ukraine.

In March 2022, for example, Manpower Group’s “Employment Outlook Survey” (covering 41,000 employers across 40 countries) highlighted that recruitment remained strong in Q2. CEO and Chairman of Manpower Group, Jonas Prising, was ebullient:

Labour markets around the world are looking strong for Q2…. any impact of the Ukraine crisis is not reflected in employer hiring intentions.”

In the UK, there was a slew of reports across many verticals attesting to a market resplendent in opportunities for recruiters.

In January, research from the KPMG UK Tech Monitor Index confirmed that technology roles in the UK were growing at their fastest rate ever.

In February, new research from APSCo confirmed that vacancies for marketing professionals hit record levels in 2021 with a hike in jobs of 130% compared to 2020.

With such vacancy levels, there was perhaps little surprise that employers were hiking salaries in the war to secure talent. Alan Bannatyne, CFO at Robert Walters, told the BBC in January this year that this was a fact on the ground across many UK verticals:

15% is the minimum pay rise we’re seeing, but some are increasing their salaries by up to 50%”


Labour shortages remain ubiquitous

This remains perhaps the paramount brute fact of the UK labour market. ‘Talint International’ reported in January this year that 55% of employers reported labour shortages.

If we fast forward to July 2022, research from WorkJam highlights that almost half of the business leaders that were part of the survey confirmed they had been understaffed for 5-6 months

Furthermore, the churn levels for 64% of the businesses surveyed had remained the same or ticked somewhat higher. Key reasons for the churn included employees feeling their hours were too long or there was insufficient flexibility in their role. Simon Wingate, Managing Director at, commented on the research:

“…employers should be more flexible when it comes to hiring………by sticking to rigid old fashioned approach to recruiting you could be discarding talent that could help fuel your growth…”

Our clients realise upto 50% Cost
Savings when they partner with us

Out with the old? New ways of working established

The concept of hybrid or even remote working is likely another key theme to emerge and remain in the post-covid restrictions world of work here in the UK. This has been confirmed by research from IWG (reported in June this year) that demonstrates that hybrid working is the most sought-after benefit for those looking for work.

Bruce Daisley, Former EMEA Vice-President of Twitter, comments on this transformation:

“We’re right at the start of the biggest transformation in the way we work that we’ve ever witnessed. The biggest danger for firms is thinking that we’re at the end of change.”

This desire for greater flexibility in the way people work was also confirmed by research released in June by Manpower Group and Thrive (a behaviour technology company). A key finding was that almost 50% of workers want to be able to choose their own work start times. Jonas Prising, Chairman and CEO at Manpower Group, explained:

A lasting legacy of the pandemic will be flexibility, but it’s not one-size-fits-all. Workers want more choice, autonomy and consideration of their wellbeing”.

Workforce Wellness remains top of the agenda

With labour shortages and new ways of working, there remains the issue that many are still dealing with the effects of the pandemic on their mental health; there is widespread recognition of this but so much more needs to be done.

Some employers are seeking to give huge flexibility to senior staff to help deal with the demands of their roles; in June, for example, Goldman Sachs announced that senior staff were being afforded a “flexible vacation policy” which permits time off when needed as opposed to offering a fixed maximum number of holidays

But the fact remains that burnout and stress remain a de facto significant signpost on the labour market map both in the UK and globally.

In February this year, for example, Adecco CEO Alain Dehaze commenting on the long-term effects of the two-year battle with the pandemic, stated with candour

Burnout threatens to become the next pandemic.”

Unfortunately for those working in the UK labour market research (reported in July this year) found that the UK is in the top 5 worst performing European countries for employee wellbeing. This was according to Latus Health, a UK-based occupational health company

Perhaps very worrying given the above is the article published on 19th April by Talint International (citing research from Get App) that 71% of UK SME employees received no mental health resources from their employers.

Labour Market Policy and Practice Complexities

The final theme that stands out over the first half of the year is the sheer range and depth of factors that are affecting the recruitment sector and which have occupied the advocacy and engagement imperatives of trade bodies such as the REC and APSCo; each stridently and tirelessly seeking to represent what remains a poorly understood and appreciated sector.

Specific policy themes include the perennial question of how to define in law those who are employed and those who are self-employed. This was brought into relief by the Court of Appeal decision in HMRC v Antholl House Productions Limited, which centred on the application of IR35 tax rules. In addition, the complexities of IR35 and the imperative for clarity for businesses on this crucial issue made their way into a debate in the House of Lords in respect of the report from the Economic Affairs Committee entitled “Off-Payroll working: treating people fairly.”

Another theme relates to the success of advocacy to the Home Office, which led to it agreeing, at the beginning of the year, to allow digital right-to-work checks (which began in March 2020 and allowed checks to be conducted over video calls) to remain permanently.

Coming back to the present (July 2022), the news that Ministers had approved plans to allow agency workers to replace striking workers has raised a chorus of concern from across the industry, given the widespread ramifications for the industry. Tania Bowers, Global Public Policy Director at APSCo, commented:

“With the uncertainty of the ongoing leadership election, we believe this decision should at least have been delayed and time given to the new Prime Minister to consider this important change in legislation….”

The larger picture remains of a UK labour market facing almost unprecedented talent shortages. Alongside calls from the likes of APSCo and REC for a truly radical policy engagement from the government that seeks to tackle the fundamentals of the change needed, from an apposite skills policy (including reform of the apprenticeship levy) to a fit-for-purpose immigration policy. Both trade bodies saw Rishi Sunak’s Spring Statement (which included the rise in national Insurance- above criticised by both REC and APSCO )as a missed opportunity to tackle these fundamentals.

With a new Prime Minister in the offing, the rest of 2022 promises no let-up in the pace of change for the sector.