The Labour Market Outlook, produced in partnership with The Adecco Group UK & Ireland, is one of the most authoritative employment indicators in the UK. 

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LMO: Winter 2017-18

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The quarterly Labour Market Outlook, produced in partnership with the The Adecco Group UK & Ireland provides a set of forward-looking labour market indicators highlighting employers’ recruitment, redundancy and pay intentions. The survey is based on responses from 2,066 employers. The survey also considers the extent of hard-to-fill vacancies and how employers are attempting to tackle skill and labour shortages, including through the employment of EU nationals and the recruitment of disadvantaged or under-represented groups in the labour market. 

The Adecco Group UK&I is part of The Adecco Group, the world’s leading workforce solutions partner. As a global Group, we provide more than 700,000 people with permanent and flexible employment every day. With more than 33,000 employees in 60 countries – 3,000 in the UK&I – we transform the world of work one job at a time. Our colleagues serve more than 100,000 organisations with the talent, HR services and cutting-edge technology they need to succeed in an ever-changing global economy. As a Fortune Global 500 company, we lead by example, creating shared value that meets social needs while driving business innovation. Our culture of inclusivity, fairness and teamwork empowers individuals and organisations, fuels economies, and builds better societies. These values resonate with our employees, who voted us number 2 on the Great Place to Work® - World’s Best Workplaces 2017 list. We make the future work for everyone.

The Adecco Group is based in Zurich, Switzerland. Adecco Group AG is registered in Switzerland (ISIN: CH0012138605) and listed on the SIX Swiss Exchange (ADEN). The Group is powered by eight lead brands: Adecco, Modis, Badenoch & Clark, Spring Professional, Lee Hecht Harrison, Pontoon, Adia and YOSS.

The Adecco Group UK&I’s head office is in London, United Kingdom. We have 10 brands, including The Adecco Group UK&I, Adecco, Ajilon, Badenoch & Clark, Modis, Office Angels, Penna, Pontoon, Roevin and Spring.

Executive summary

The report examines the interrelation between migrant worker employment, skills investment and employment practices among UK employers, a significant but often under-reported part of the migration debate.  Additionally, this report considers employer attitudes towards the various policy options that the UK Government may be considering to help control the number of migrant workers from the EU through its proposed changes to immigration policy that are due to be unveiled in its forthcoming consultation paper.


According to the report, the demand for labour in Q1 2018 will remain robust. This quarter’s net employment balance – which measures the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff levels in the first quarter of 2018 – has decreased to +16 from +18 over the past three months. This is consistent with official labour market data, which show that the number of vacancies in the UK economy remains well above historical average levels.

In the projections in this report, employment confidence is highest in the construction (+37), hospitality (+33) and the business services (+30) sub-sectors. On the downside, employment growth looks set to be more modest in healthcare (+6), education (+3) and public administration (–8). Across regions, employment confidence is highest among employers in the north-west of England (+29) and the West Midlands (+19), and lowest among those in Yorkshire and Humberside (+6) and Wales (+3).


In a continuation of recent trends, wage growth is projected to remain subdued in the year ahead, according to the survey data. Median basic pay expectations for the year ahead are 2%, which is consistent with recent LMO reports and suggests that there is unlikely to be significant upward pressure on wage growth in the near term at least. This is despite signs that further labour market expansion is being constrained by a lack of supply of skilled and unskilled staff in some sectors, with about two-thirds of employers reporting they have vacancies which are difficult to fill.

EU migrants

Against this backdrop it is not a surprise that a high proportion of organisations continue to employ EU nationals, with two-thirds of employers saying this is the case, against a backdrop of continued, albeit slower, growth in the number of EU nationals in employment in the UK. When asked why they recruit EU nationals, by far the most common response by employers is that they don’t consider nationality when hiring but simply choose the best person for the job. The most popular reason given by organisations for recruiting EU nationals is that they cannot find local applicants to fill semi-skilled or unskilled roles from the domestic workforce.

The research in this report suggests that this difficulty to find sufficient UK-born applicants is not because employers that recruit EU nationals are not making efforts to recruit or train ‘home grown’ workers. The survey shows clearly that organisations that employ EU nationals are significantly more likely than employers that don’t recruit EU nationals to be investing in training and seeking to recruit from a wider range of under-represented or disadvantaged groups, such as older workers or those from minority ethnic backgrounds.

This indicates strongly that organisations that employ EU migrants are typically doing so as part of wider efforts to invest in skills and talent and find the labour they require, not because they are looking to cut costs or are failing to invest in UK-born workers. Consequently, it is highly unlikely that future migration restrictions on EU nationals will act as a catalyst for improving skills investment and the participation rates of underrepresented groups in the UK, although it should be recognised that lower pay and employment conditions is the third most popular reason among low-wage employers.

Post-Brexit immigration policy

Considering the high proportion of organisations that employ EU nationals and the reasons they do so, it is no surprise that a majority of employers would prefer to see free movement of labour retained rather than have migration restrictions introduced. However, employers’ views vary considerably across regions and sectors. Whereas a substantial majority of employers in Scotland and London favour free movement of labour, opinion is more divided among other regions, especially in the West Midlands, the north-west of England and the south-east of England. Across the broad sectors, employers in healthcare and private sector services report that they would prefer to retain free movement of labour than see migration restrictions introduced. Healthcare employers are most likely to favour free movement (60%) over restrictions (22%). In contrast, manufacturing employers are marginally more likely to favour migration restrictions over free movement, despite being asked to think about their organisation when responding.

Despite employers’ preference for free movement of labour, it seems inevitable that the Government will introduce migration restrictions post-Brexit that will seek to recruit ‘the brightest and the best’. According to the survey data, employers would like to see the Government extend the existing skills shortage occupation list for non-EU nationals to include a system that caters for low- and high-skilled EU nationals. This reflects employers’ appetite and need to recruit EU nationals to fill low-skilled or unskilled roles. It is also consistent with employers’ preference for a national and simple EU immigration system. 

Relatively few employers express support for other schemes, such as a regional or sectoral scheme. The extent of support for a regional system is much stronger in Scotland although, overall, employers based in Scotland still would favour a UK-wide scheme.


Finally, the survey data underline the need for government skills policy to boost participation in adult learning in the UK, which remains significantly below that in most other EU countries. As the survey data highlight, the share of organisations that plan to increase their training investment is broadly similar to the proportion of organisations that plan to reduce it, despite the prospect of migration restrictions for non-UK nationals from the EU and a tightening labour market. One way of boosting investment in training would be to broaden the apprenticeship levy into a more flexible training levy, which would prove popular among employers and make it much more responsive to their skills requirements alongside, more significantly, more funding for adult skills via the National Productivity Investment Fund.

Download the report below:

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Autumn 2017

(242 KB)
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Summer 2017

(205 KB)
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Spring 2017

(352 KB)
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Winter 2016-17

(320 KB)
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Autumn 2016

(225 KB)
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Summer 2016

(333 KB)
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Spring 2016

(245 KB)

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