Post-election certainty will encourage businesses to accelerate their hiring plans, says Dan Barfoot of CMD Recruitment
Now that the 2024 UK election is over and the dust has settled, we’re taking stock of what the change in government means for British jobs and wages.
Businesses will likely be appreciative of the clarity that comes with a new political leadership, and a potential easing of the economic uncertainty we’ve lived with in recent years.
From our perspective at CMD Recruitment, the stability provided by a clear political direction is invaluable.
We anticipate that this newfound certainty will encourage businesses to accelerate their hiring plans and make more strategic long-term investments in their workforce.
The new government does face significant challenges in addressing a range of economic issues, but overall, the signs are pointing in a hopeful direction for UK employment and economic growth.
The UK job market in context
Before we delve into the potential impact of Labour’s election win, it’s important to take a small step back and consider the broader context of UK recruitment and workforce trends.
One could argue there is a two-speed jobs market in effect in the UK, where some industries or roles – tech, sales, engineering – are experiencing significant hiring and robust job growth, while others – like HR and marketing – are facing stagnation or even potential job losses.
In sectors where cautious sentiment persists, employers are obliged to look more carefully at costs. Meanwhile, employers who face persistent talent shortages continue to benefit from targeted hiring initiatives and external recruitment support.
How will the election result affect employment?
At the core of Labour’s economic policies is a push to reignite investment in the UK with a major industrial strategy and funding for industries contributing to the green economy.
The establishment of Great British Energy, a publicly owned energy provider, is tipped to create 650,000 “new high-quality jobs”, according to Labour, while their promised British Jobs Bonus will distribute up to £500 million of incentives annually to employers who create green and industrial jobs, from 2026.
Funded by a National Wealth Fund, Labour’s industrial and clean energy strategies will be financed with a £7.3 billion investment into ports, steel and supply chain industries, alongside green tech infrastructure such as gigafactories, carbon capture and hydrogen facilities.
The focus on green and industrial investment naturally lends to forecasts of healthy future growth for engineering, manufacturing and industrial jobs.
Although such investments may take years to materialise, we do expect these areas to see an uptick in new job opportunities.
The emphasis on green and industrial sectors aligns with our own observations in the market. Employers are already expressing interest in candidates with skills in sustainability and advanced manufacturing, indicating a proactive shift towards these growth areas.
Another positive point is Labour’s assurance that the corporate tax rate will be capped at 25 per cent, providing certainty for business planning and investment that can hopefully swing hiring intentions back into positive territory.
With plans to stimulate job growth across a range of industries in all corners of Britain, we expect organisations will need to shore up their internal functions, creating strong potential for growth in HR jobs along with marketing, accounting and administration positions.
We see this as an exciting opportunity for job seekers and employers alike. The anticipated growth in administrative and HR roles will not only support the expanding industries but also enhance the overall efficiency and competitiveness of businesses across the UK – it’s looking positive for our clients who work in this space!”
A ‘genuine Living Wage’
A planned increase in the National Minimum Wage, to account for increases in the cost of living, is another centrepiece of Labour economic policy – and has attracted plenty of debate.
The NMW increased from April 1, delivering an additional £1,800 a year to minimum wage workers. Now, our new government is set to remove age bands for the NMW along with a planned increase and introduce stricter enforcement for employers.
Increasing the National Minimum Wage offers pros and cons for the UK job market.
Workers will no doubt welcome the increase in pay, while employers will have legitimate concerns about keeping operating expenses under control in a time of persistent inflation. This may be especially challenging for SME employers with smaller revenues.
Worker protections and challenges for employers
Worker protections are a special focus area for our new government, with significant potential impacts on organisations and employees.
As part of its Plan to Make Work Pay policies, Labour plans to eliminate zero hours contracts and ‘fire and rehire’ practices, introduce the right to flexible work, along with shrinking the unfair dismissal boundary from two years to ‘day one’ of employment.
Whilst these measures are likely to have strong support amongst the working population, they may present challenges for employers.
Stricter unfair dismissal laws can risk adding further downward pressure on hiring demand and pay, as employers have new reasons to be cautious about hiring permanent workers.
For employers, there will be work required to review policies and employment contracts when new laws are introduced to expand workers’ eligibility to make unfair dismissal claims, and receive parental leave and sick pay.
With government plans to establish a new statutory body for enforcing rules related to workers’ rights, the minimum wage and other workplace issues, employers will have good reason to prioritise compliance.
The impact on UK recruitment
Perhaps the only practical obstacle to these grand visions is skills shortages. To drive the green transition and re-invigorate Britain’s industrial sector, employers will need more access to engineering and technical talent to take advantage of growth incentives.
In practical terms, recruitment for these specialisations will become even more competitive, which in turn has the potential to drive up pay for these even further.
Employers will benefit from careful workforce planning and guidance from trusted recruitment specialists to create effective hiring strategies.
Dan Barfoot is operations manager at CMD Recruitment, which has offices in Devizes, Melksham, Calne, and Bath.