London businesses almost twice as likely to have made staff redundant during economic instability

Digital staffing agency Coople has surveyed 1000 UK business leaders, inviting them to share their experiences of how economic conditions have impacted their hiring practices.

The study revealed that 25% of UK companies had responded to the economic instability by making redundancies, but in London this percentage was far higher, at 45%.

It also found that businesses based in London were much more likely to have used alternative staffing methods such as working with temporary staff from an agency, or working with freelancers. The average percentage of businesses across the whole country who had tried alternative staffing was 35% – however in London, this percentage rose to 52%.

London business leaders also proved more likely to consider industry trends a priority, at 23% compared to a national average of 15%. They were also much more likely to prioritise cost-cutting. 22% of the country overall said it was a top priority, compared to 39% of Londoners.

Rufus Hood, Country Manager UK at Coople, comments:

“These are definitely difficult times for UK businesses, with a full quarter of those we surveyed implementing redundancies, and nearly as many at 19% stopping hiring. It’s highly likely that these decisions were influenced by the strain of the current economic environment, with rising costs from suppliers and inflation affecting many businesses.

A higher percentage of these companies were in London or were led by younger business leaders – these are more likely to be startups or other businesses operating in competitive, and sometimes, volatile spaces.

Over a third of the business leaders we surveyed had tried alternative staffing solutions, like working with agencies, freelancers and contractors. We were pleased to see that so many of these companies found it effective, with 85% saying that these tactics helped. At Coople, we believe that flexible working is the best way to stay adaptable and agile, taking on additional support from trusted temporary staff when you need it.”

The impact of economic conditions

A quarter of UK business leaders responded to difficult economic conditions by making redundancies, at 25% of those surveyed. 19% had paused hiring. However, 56% had not made any changes to their number of staff.

Younger business owners and decision-makers were more likely to have made staff redundancies, at 30% of those run by 25-34 year olds and 41% of those run by 35-44 year olds. This is much higher than the 4% of business leaders aged 55-64 and 2% of those aged over 65 who gave this answer.

Open communication

The majority of business leaders were communicating openly with their staff about the impact economic instability might have on the company and on their jobs. However, 18% did not communicate with their employees about the topic.

Team meetings were the most popular method, chosen by 41% of business leaders. 33% said they used email updates and company-wide meetings, and 30% opted for one-to-one discussions.

Younger business leaders were more likely to openly discuss the topic. Only 9% and 10% of those in the 25-34 and 35-44 age brackets said they never communicated with their employees about this, compared to 26% of business leaders aged 45-54, 33% of those aged 55-64, and 51% of those who were 65 or over.

Alternative staffing solutions

35% of business leaders said they had used alternative staffing solutions such as staffing agencies, freelancers, and contractors – and of this number, 85% said it was effective.

Similarly to the statistics about redundancies, business leaders aged under 45 were more likely to have used alternative staffing models. 45% of business leaders aged 25-34 and 47% of those aged 35-44, reported that they had worked with agencies, contractors and freelancers. Perhaps companies that are newer, as well as those that operate in fast-moving markets, are more likely to try alternative staffing solutions.

Priorities

The survey asked business leaders to say which factors were most important when making hiring decisions. The most popular answer was employee performance and productivity at 33%. 25% of the respondents selected future growth projections, with 22% choosing cost saving measures and a minority opting for industry trends at 15%.

Respondents were also asked to choose between cost-cutting measures and developing their workforce in times of economic instability. 33% said both were equally important to them, but 30% said they would prioritise cost-saving compared to 14% who would choose workforce development.

This indicates that while most business leaders are prioritising cost reduction, when it comes to decisions specifically around hiring, employee performance is a key consideration, and to many, it’s just as important.