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Recruitment for permanent roles stalls, say REC and KPMG

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The permanent jobs market has stalled for the first time since July 2009, according to the Report on Jobs, published today by the Recruitment and Employment Confederation (REC) and auditors KPMG.

Recruitment consultants indicated a reduction during October, albeit marginal, in permanent staff placements, for the first time in over two years.

Anecdotal evidence suggested the drop in placements reflected hesitancy among clients regarding the economic outlook, the report finds.

But in contrast to the trend seen for permanent placements, a further modest increase in temporary/contract staff billings was recorded during October.

The pace of growth quickened since the previous month, although it remained subdued, compared with the long-run average for the series.

Permanent salaries stagnate

Starting salaries awarded to successful permanent candidates remained broadly unchanged in October. Panel members indicated that higher levels of staff availability had suppressed pay pressures.

Meanwhile, an increase in the national minimum wage was reported to have contributed to solid growth of temporary/contract staff pay.

Stronger improvement in candidate availability

The availability of staff to fill job vacancies was reported to have risen further in October. Permanent candidate availability increased at the sharpest rate since December 2009, while the latest improvement in temporary/contract staff availability was the strongest in 23 months.

Comments

Kevin Green, chief executive of the Recruitment & Employment Confederation, said: “The November report shows that the UK’s permanent jobs market has stalled for the first time since July 2009. The slowdown is due to a reduction in public sector employment and weakening consumer and business confidence. Therefore, the Government must do more to help, especially in encouraging small private sector employers to take on young people. We have been calling for this over the past two years but as the situation is now becoming critical, the chancellor must address this in his Autumn Statement later this month.

“However, there is some good news as a result of increased hiring activity in sectors such as technology and engineering and professional services such as accountancy and HR that appear to be bucking the trend. It is also worth noting that employers’ use of temps increased last month – fantastic news, following the implementation of the Agency Workers Regulations on 1 October.

"This again demonstrates the importance of the UK’s flexible workforce in helping businesses meet fluctuating demand and keeping people in work.”

Bernard Brown, partner and head of business services at KPMG, added: “This month’s data presents a gloomy picture for permanent jobs. The figures show permanent placements falling for the first time in over two years. Nervous employers are placing recruitment decisions on hold amid concerns over the economic outlook, in many cases choosing instead to plug gaps with temps.

“For temporary jobs, the situation is slightly more positive: temporary placements grew at a sharper (albeit still modest) rate in October; and hourly pay rates also increased, for the ninth successive month, partly as a result of a recent uplift in the national minimum wage. “While permanent employment opportunities have dipped into negative territory, overall the detail reveals this is heavily influenced by fewer employment opportunities in healthcare. There is some positive news with more permanent opportunities in IT, finance and accounting showing signs of improvement. However, we are still on a knife edge as we enter a critical time for European economic stability.”