One in three UK managers plan to freeze or reduce recruitment despite UK economy exiting recession, survey finds

London - Despite Britain’s economy formally exiting recession and reporting the fastest growth in nearly three years, one in three organisations plan to either freeze (21%) or reduce (14%) recruitment within the next six months, according to a new survey of UK managers from the Chartered Management Institute (CMI).

The survey of just under 1,000 British managers comes as the ONS reports a declining number of job vacancies across the country, with a decrease of 26,000 vacancies from November 2023 to January 2024. The survey suggests a chill in the labour market, with a growing number of managers putting their recruitment places on hold.

According to the CMI’s recruitment tracker, the number of organisations freezing or reducing recruitment over the next six months is 11 percentage points higher than in June 2023 (24%) and 20 percentage points higher since July 2022 (15%).

When asked for the reasons behind the decision to freeze or reduce recruitment, three in five managers (60%) blamed declining financial budget or income to their organisations, organisational restructuring to reduce costs (55%), or increased economic uncertainty (34%).

One in five managers also cited higher staff pay (19%), with a smaller number citing increased digitalisation, automation, and technology use (13%).

In the same survey, a concerning number of UK managers—one in five (22%)—stated that their organisation is currently considering redundancies to save costs, but the overall majority—three in five (61%)—said they were not. The number of those who said that their organisation is currently considering redundancies to save costs (22%) increased significantly compared to October 2022 (15%) and June 2023 (17%).

In the wake of the recruitment freeze, Anthony Painter, the Director of Policy at the CMI, called on UK organisations to double down on upskilling their current teams and focus on their continued professional development. He says:

While the UK economy appears to be slowly improving, our findings suggest organisations and their management teams are still feeling the financial strain with squeezed budgets and growing nerves about the months ahead.

As organisations reflect on their future recruitment and expansion plans, they shouldn’t forget their biggest asset—their existing teams. Investing in skills can create a virtuous cycle, improving the ability to attract, develop and retain talent. According to a LinkedIn study, 94% of employees said they would stay with their employer if the employer invested in their skills development.

Managers play an essential role here. Better-skilled managers must play a greater role in providing their team with the necessary training and skills development as they tend to better understand the skills their team members need to build.