UK Employment Growth Hits Two Year Low
Small businesses are said to be more reluctant to make new hires in light of EU membership uncertainty
The hiring intentions of UK businesses have hit a two-year low with the economy having witnesses the biggest monthly drop in employement grown since since the aftermath of the recession in 2008, according to a report by BDO LLP.
The BDO’s latest report reveals that its ‘Employment Index’, which tracks the hiring intentions of small firms over the coming six months, has dropped from 104.8 to 102.2.
The recent introduction of the National Living Wage – making employment more expensive – and uncertainty over the UK’s EU membership are suggested as possible reasons for the suspected slowdown in recruitment.
Despite the negative trend, one interpretation of the data suggests that British small businesses could finally be experiencing increased productivity.
Peter Hemington, partner at BDO LLP, commented:
“Our productivity ultimately determines how much we earn and the UK’s performance in this area has been verging on the disastrous since the recession. Figures earlier this year showed that output per hour here is now 21% below the average of our G7 partners.
“Our figures this month on hiring intentions suggest that UK businesses are starting to look harder at whether recruiting new staff is always the right answer. While this trend will slow the growth of the workforce, it could signal the start of a move toward a higher investment, higher productivity economy. In the long run, this would help us generate higher living standards and more interesting jobs for UK workers.”