(Bloomberg) -- Workers’ confidence in the stability of their jobs is unusually high for the level of wider economic uncertainty facing the UK, according to research from recruitment consultancy Robert Half.
While economic forecasters are largely predicting a run of stagnation for the UK economy, 58.4% of workers are confident their role is safe over the next six months, Robert Half found in a report published Monday.
Almost half of those surveyed, 47.4%, said they’re optimistic about their career prospects and ability to progress over the coming five years.
While the findings will come as a relief to Prime Minister Rishi Sunak, as the economy is set to be a key battleground on which next year’s general election is fought, they are likely to be a warning to the Bank of England. It is still battling to get inflation down from the current level of 4.6% to the target of 2%, a journey that Governor Andrew Bailey expects to be long and tricky.
Tightness in the labor market is driving up inflation, according to BOE policymakers, as a shortage of workers with the correct skills means staff are finding it easier to bid up their wages.
Wage data shows salary growth retreating from its peak, but unemployment is stubbornly low. Some Monetary Policy Committee members have suggested that the neutral rate of unemployment — the level needed to keep rises in the cost of living under control — will be higher than before the pandemic.
“While the current economic uncertainty is a top concern for businesses, the workforce isn’t showing the signs of diminishing confidence as we would usually see at this time,” said Matt Weston, senior managing director of UK & Ireland at Robert Half. “This could be a worrying sign for the BOE, as it implies workers are still in short supply and wage rises could persist.”
In a further sign that labor market tightness is set to persist, 47% of employer respondents to Robert Half’s survey said they would increase their permanent headcount in 2024. Concerns over recruitment remain, with 75% expressing concern about the ability to attract and retain the correct talent.
“Today’s labor market snapshot is the culmination of factors from the last few years, including Brexit, the Great Resignation and the pandemic,” Weston said.
MPC member Megan Greene said last week that she was concerned that the BOE’s monetary policy tightening, which has entailed 14 interest rate hikes since December 2021, wasn’t having as great an impact as first thought on inflation because the neutral rates of unemployment and interest were now higher.
Her hawkish comments mean Greene may push for a further rate hike from the current level of 5.25% when the MPC’s next meeting concludes on Dec. 14.
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