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Labour Market Lessons from 2016

Employers and employees both use the New Year as a time for reflection and many of you will be considering changes to your own working patterns in 2017 – whether it be taking on extra staff to grow your business or forging a brand new career. Regardless of which applies to you, it’s useful to have an understanding of the current jobs climate in order to make the best use of it, and very often, looking back is a great way to help us move forward. This week we take a look at some of the key happenings in the jobs market in 2016 and ask the question, how is 2017 shaping up for recruitment?


Whether you voted to Leave or Remain, there’s been a clear loss of confidence in international markets, evidenced by a catastrophic fall in the pound and a slowing of inward investment in recent months. It’s more difficult to predict where the jobs market is going to go as a result of Brexit, especially with the headlines changing on a daily, if not hourly, basis right now.

This week, PM Theresa May announced emphatically that the UK will not remain part of the single market, and whilst we can still trade freely with our European neighbours it will be on their terms, not ours. In other words, UK business is no longer an equal but a competitor in Europe.

A figure of 400,000 was cited as the number of new jobs Brexit would create by the Leave campaign. However, industry pundits widely agree this is needle in a haystack probability.

Whilst it’s true the UK will have to look further afield for new business, economists agree that trade – in this particular case exports – does not equate to new jobs.

Jonathan Portes, Professor of Economics at King’s College London, said: “Almost any economist – regardless of their views of the economics of Brexit – would tell you that over time the impact of trade deals on overall employment in the UK is likely to be negligible or zero.”

Struggling productivity

Labour costs rose at the fastest rate since 2013 in the three months following Brexit, adding another piece to the so-called ‘productivity puzzle’. The puzzle, why UK productivity (a measure of what is produced per hour worked) lags behind its European counterparts, continues to baffle economists who’ve been trying to come up with an answer since the 2008 global financial crash.

One theory is that the ‘always-on’ mentality of the British workforce is highly detrimental to productivity. Taking work home, constantly checking emails and working through lunch breaks, for example, are taking their toll on workers and dragging down productivity – leaving employers struggling for ways to justify the costs of pay rises and bonuses. In other words, labour costs (wages, bonuses, benefits and so on) are rising but output is not rising to match – the employer is paying more and getting less.

Productivity rose slightly in 2016 but is still nowhere near the output of our continental neighbours so how this will be tackled in 2017 – by employers and workers – remains to be seen.

Employment Law – adjusting to the changing nature of work

The most noteworthy case relating to employment law last year fixed the spotlight firmly on San Francisco-based company Uber – a worldwide private taxi-service. An employment tribunal ruled that Uber’s 40,000 drivers were entitled to holiday pay, paid rest breaks and National Minimum Wage, regardless of the casual nature of Uber work. The Trades Union Congress (TUC) said the case had exposed the ‘dark side’ of the UK’s labour market.

The GMB described the decision as a ‘monumental victory’ despite Uber pledging to appeal against the ruling. It denies acting unlawfully, stating that its drivers were not employees at all but self-employed contractors.

In particular, the ruling highlighted Uber’s use of manipulative language. It stated: “The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our mind faintly ridiculous.”

With many workers trapped in similar insecure jobs with low pay and no benefits, this landmark ruling may change the face of the so-called Gig Economy as we know it in 2017.


It’s not all doom and gloom! Despite the uncertainty surrounding Brexit and a weak year for productivity, we’ll know much more about what life out of Europe looks like in the coming weeks.

And, while productivity languishes, the labour market is still buoyant, with the unemployment rate standing at 4.8%, and forecast to drop again in Q1 2017. In addition, competition for skilled workers is fiercer than ever with employers, seeking to boost productivity, prepared pay handsomely to secure these skills.

Whichever way you look at it, 2017 is going to be a challenging year for employers and jobseekers alike – with uncertainty about the future the common denominator.

Right now, the best advice that we can give is to look after Number One, whether it’s you or your business.

By maintaining a healthy work-life balance or championing it to your staff, you’ll have the best chance of (a) working healthily and productively, and you’ll also (b) increase output (if you’re running a business) or boost your career prospects (if you’re a worker).

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