Will the energy bailout improve business confidence?
The new UK Prime Minister, Liz Truss, announced a plan on 8th September to help businesses with the rising energy prices due to come into effect this autumn. Named the Energy Price Guarantee, it aims to cap the amount households and businesses will ultimately spend on their energy bills in order to minimise the negative impact of the cost of living crisis.
From the 1st October, each household is set to pay an average of £2,500 a year on their energy bill for the next two years and this will be capped as per the new strategy. There will also be a new, six-month scheme to provide governmental support for businesses which will continue beyond the six months for vulnerable industries.
The UK jobs market is currently running at record-breaking levels, but many economists had forecast a significant slowdown in investment and, therefore, recruitment activity as winter approaches – job vacancies are in abundance, but workers are reluctant to change their employment situation due to their financial concerns.
But with the Energy Price Guarantee now providing some financial relief, what’s on the horizon for businesses?
Earlier this summer, the CIPD’s quarterly Labour Market Outlook report found that the labour market was, at the time, incredibly tight, with 47% of employers having hard-to-fill vacancies. Businesses were focusing on upskilling existing staff in order to tackle recruitment and retention difficulties.
This information, coupled with the increase in inflation and the Bank of England base rate rise that was happening at the same time, is likely related. Experts suspect that the impact of potential financial instability means employees want to stay within their current role due to the uncertainties associated with changing jobs, particularly within the current climate.
Indeed, research presented by the Royal Economic Society in 2019 investigated the circumstances in which workers changed job roles, finding that “the number of people making the transition to new occupations decreases during recessions.” It also points out that employees do still continue to change jobs during a recession, but are likely to move to occupations similar to what they previously did, and stay at the same skill level – food for thought regarding the impact on the economy and employment as we head towards a potentially difficult winter.
But will Liz Truss’s Energy Price Guarantee change all that?
There are certainly predictions of an economic upturn as a result of the scheme, as it would potentially give companies the opportunity to continue working normally for at least the near future, with six months of support and reviews every three months.
Martin McTague, National Chair of the Federation of Small Businesses, stated that the current rate of energy bills for small businesses is “unprecedented” and that “we now have a high-level commitment in principle to help businesses get through the winter intact. Done right, this will be a lifeline – protecting jobs, communities and future economic recovery.” However, due to the uncertainty around the details of the scheme, McTague voiced concern that “this is not enough information” for them to be able to plan ahead.
The Recruitment and Employment Confederation also released a statement immediately following the government’s announcement of the energy scheme, wanting clarity on what it means for businesses and remarking that “six months will not provide the stability businesses need to plan into the new year. We need to see a long-term view of support.”
How could the Energy Price Guarantee benefit UK businesses?
Thankfully, the new business secretary, Jacob Rees-Mogg, is due to make a further announcement on the support for businesses this Wednesday. The announcement is soon to be followed by a mini-budget from the new chancellor, Kwasi Kwarteng, on Friday.
With both events aiming to provide clear, clarifying answers to many questions, there is hope that the projected changes will be substantial enough to boost the economy back to pre-pandemic levels and, therefore, get the jobs market back to normal.
If effective at levelling out the financial market and the economy, the energy cap has the potential to bring stability and boost confidence in candidates who wish to change careers or progress within their industry. A chance for ‘business as usual’.
With little information available at this stage, we can only speculate on the future of business and employment. And with job vacancies still incredibly high, it may take further innovative and creative ways for businesses to attract the right candidates. After all, where there is a big pond, there are even bigger fish – ready to snap up top-tier talent before the competition has time to formulate a great attraction strategy!
Which is where Plus One Recruitment comes into play! Companies that are looking to expand their business with amazing talent can turn to our recruitment team as we help employers attract candidates that may otherwise be difficult to find in such a tough labour market. If you need assistance or have questions about your situation, our team will be able to help you quickly and efficiently. For more information, please take a look at our Employers Page to understand what we could do for you.
