Outlook worsens for permies as Brexit uncertainty continues
Permanent job placements have fallen for the first time in two-and-a-half years, according to the latest Report on Jobs by KPMG and The Recruitment and Employment Confederation (REC).
The report, which is compiled by IHS Markit with data from 400 recruitment consultancies, blamed the drop on ongoing candidate shortages and the rising economic uncertainty surrounding Brexit. The last time the number of workers placed into permanent roles declined was in mid-2016, shortly after the referendum on leaving the European Union. The number of vacancies also fell to its lowest level in 27 months.
Candidate availability to take up new roles continued to fall; the decline in candidate numbers was linked mainly to the record high UK employment level – 75.8% towards the end of 2018 – but also the heightened uncertainty surrounding exactly how the UK will leave the European Union is reckoned to have made staff more hesitant to move. The lower supply of candidates has kept rates high, with both permanent and temporary rates rising significantly since December.
Brexit uncertainty is understood to be increasing demand for contract and temporary workers, with temp billing rising, consistent with a six-year continuous phase of growth – albeit at the joint-slowest pace over that period.
Regionally, the report data showed that the drop in permanent placements occurred in the Midlands, the North of England and London, whilst in the South of England there was moderate growth. Increases in temp billings in the Midlands and the South of England managed to offset declines in the North of England and London.
Public sector job vacancies fell in January across both permanent and temporary roles, contributing to the slower rise in vacancies overall; there was also slower growth in the private sector – growth of demand for permanent and temporary workers drooped to 29- and 72-month lows, respectively.
The fastest growth in vacancies was in Accounting/Financial, followed by Engineering and IT & Computing. All of these increases were offset by a substantial fall in vacancies in Retail, which was the only sector where vacancies fell.
Neil Carberry, the REC chief executive, said: “This is the first month since July 2016 where permanent placement numbers have dropped, with weaker – but still positive – performance for temporary roles, and the lowest rate of vacancy growth for over two years. But we should be careful not to overreact – employment rates are high, and the performance of our labour market overall is still strong. We also know that key sectors such as accounting, engineering and IT are facing shortages.
“That said, the survey results are a sharp reminder to politicians in Westminster and in Brussels of the need to provide businesses with clarity about the path ahead, so they can invest with confidence.
“In the public sector, the NHS continues to find it particularly difficult to find care workers and nurses – the effects of which are being felt by patients and overworked existing staff. Along with other sector shortages, this again emphasises the need for pragmatism on immigration and a clear post-Brexit transition period.”
Commenting on the report, James Stewart, Vice Chair at KPMG, said:
“With Brexit just days away now, it’s definitely a nervous time for recruiters. January marked the first fall in permanent staff appointments since the referendum and we’ve seen a sharp decline in the number of candidates entering the jobs market. This is pushing up starting salaries at historically strong rates.
“Both employers and employees are in ‘wait and see mode’ now and there is little reason to believe the brakes will come off the jobs market before we find out what sort of Brexit the UK is about to experience.
“The majority of sectors across the UK economy are now more cautious, and hiring more slowly than they were 12 months ago. Indeed, the retail sector is actually shedding permanent staff.
“Nationally the number of permanent staff appointments has fallen considerably in the North region, Midlands region and London. The exception is the Southern region where the number of permanent staff appointments continues to grow, albeit more slowly.”
8th February 2019.