The latest JobsOutlook survey from the Recruitment and Employment Confederation (REC) shows that 79 per cent of employers are optimistic about economic conditions, despite several impending headwinds.

The monthly survey of 600 UK employers shows that, overall, 81 per cent of them intend to take on more staff during the coming three months. However, amongst smaller businesses, hiring intentions are dampening. Whereas in January, 74 per cent of microbusinesses (with one to ten employees) reported increased hiring intentions, by February this had tumbled to 62 per cent.

The data also reveals that 95 per cent of the respondents are operating at capacity or with only a little capacity to absorb more work with their existing staff headcounts, while 17 per cent expect candidate shortages for technical/engineering roles.

The REC’s CEO, Kevin Green, said that the positive data about business confidence contained in the survey was encouraging, but also noted that it was far from universal: smaller businesses were exhibiting weaker demand for staff.

Green speculated that the fall-off in hiring intentions amongst small businesses may be a reaction to forthcoming events, including the introduction of the national Living Wage and the uncertainty being generated by the EU referendum in June. Other headwinds, he noted, include a drop in commodity prices and the impending apprenticeship levy, both of which make it more likely that hiring will ease in the months ahead.

He added: “Engineering is a particular area of concern – the government announced new major infrastructure projects in last week’s Budget, but there are question marks over how increased demand for skilled workers will be met when supply is already a problem.”

The survey follows last week’s Budget Statement from the Chancellor, which has been criticised for failing to acknowledge the taxation needs of the UK’s growing army of contracting professionals, who have been playing a significant part in easing skills shortages.

The failure to suspend plans to abolish tax relief on travel and subsistence expenses incurred by skilled Umbrella Company Employees on their lengthy journeys to and from temporary workplaces came under fire from Julia Kermode, CEO of the Freelancer & Contractor Services Association (FCSA).

Ms Kermode pointed out that the Government’s infrastructure projects are heavily dependent on contracted workers. Crossrail, new plans for HS3, the 18-mile trans-Pennine tunnel and the M62 widening project will suffer, she said, as fewer contracting professionals will be willing to travel for assignments.

The public sector, too, is heavily dependent on contracting professionals, she noted, adding: “Around 90% of social workers, 89% of shift doctors, 94% of locum doctors and 88% of allied health professionals are engaged as umbrella employees or PSCs, so are likely to be impacted by cuts to contractors’ expenses – and that’s probably just the tip of the iceberg.”

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