Although moderate, it was the fastest drop in short-term appointments for over two-and-a-half years. Panel members frequently indicated that employers had chosen to convert temp workers into permanent employees due to the effect of Agency Worker Regulations.
Overall demand for staff strengthened in March, as the number of vacancies available to jobseekers rose at the fastest pace since July 2011. The pick-up in growth was driven by a stronger increase in permanent job vacancies, which offset a slower rise in the number of available short-term roles.
Growth of permanent staff availability eased further in March to near-stagnation. Temporary/contract staff availability meanwhile rose at the weakest rate since August 2011.
Starting salaries awarded to permanent hires were broadly unchanged in March, following a modest decline in February. Temporary/contract staff pay rose modestly, with some panellists highlighting the inflationary impact of Agency Worker Regulations.
Tom Hadley, director of policy and professional services for the REC, said: "We have seen a rise in permanent appointments every month in the first quarter of 2012 with vacancy growth now at an eight-month high. This is good news for job-seekers and a positive indication of increasing employer confidence. Recent tax changes announced in the Budget, the Youth Contract and reductions in red tape for businesses, that came into effect this month, should further boost employer confidence and accelerate hiring activity.
"As demand increases, the need to address the disconnect between the skills employers are looking for and what job-seekers have to offer, will become more pressing. Expertise in IT and engineering, as well as workers in catering and driving, continue to be sought after. The Government needs to do more to address the supply side of the equation, ensuring school leavers, graduates and other job-seekers get sound advice on the skills and qualifications they need to secure the jobs they want.
"This month's data shows a slight decline in appointments of temporary workers. This may in part be linked to employer uncertainty over the Agency Worker Regulations, although it could mainly be due to the fact that increasing business confidence has resulted in more employers being prepared to take on permanent hires rather than temporary or contract staff. The benefits of flexible staffing arrangements are well established and other REC data provides some positive indications in terms of the outlook for temporary work in the UK."
Ronnie McCombe, partner at KPMG, added: "It's encouraging to see permanent placements in positive territory for the third month in a row in 2012, albeit slightly down on last month's high. This provides further hope that the employment market will win through to a stronger recovery as the year progresses. Sectors such as IT & Computing and Engineering/Construction continue to perform well. However, it is certainly still too early to call a jobs recovery. There remain real tensions beneath the surface. Some of the rise in permanent placements appears to stem from employers simply switching temporary workers to permanent status due to the higher entitlements that the Agency Worker Regulations have given them. And while it is heartening to see that overall vacancies are rising, salaries are stagnating meaning the economy is likely to carry on feeling the pinch from cost conscious consumers reluctant to part with their money.
"There are grounds for cautious optimism but recovery remains fragile and could all too easily be blown off course."