A key indicator of the recruitment market has shown that hiring trends remained “subdued” in May, with permanent employment falling for the fifth time in six months, and independent contractor and temporary billings growing at the slowest rate for 73 months.
The latest Report On Jobs, a joint monthly publication of the Recruitment and Employment Confederation (REC) and KPMG, also showed permanent employment availability had declined further whilst vacancy growth stayed close to a multi-year low.
The ongoing economic uncertainty that the Brexit impasse has caused has weighed heavily on the job market in recent months: although private sector unemployment levels are at their lowest for forty years, an unwillingness to invest until there is more certainty over how Brexit will affect the economy has led to less new job roles being created, and, similarly, has discouraged workers from wanting to risk changing jobs.
Although a greater number of people are in work than has been the case for a long time, people simply aren’t changing jobs.
This has led to sharp increases in starting salaries and pay rates as well as increased demand for temporary and contract workers, although with temporary billings only increasing slightly in May, demand may be close to peaking.
Permanent job placements fell again in May and at a quicker rate than in April, with uncertainly being widely reported as a contributing factor, but it was also reported that demand for permanent employment had weakened compared to earlier in the year.
This was further illustrated by the number of vacancies advertised, which did grow, but compared to historical standards, not by a huge amount: the rate of growth remained close to April’s, which was an eighty-month low.
The Office of National Statistics released figures last month that showed that between January and March, the UK’s temporary and permanent employment rate had grown to 76.1%, the joint-highest figure on record. June’s Report On Jobs substantiates these figures, with available candidate numbers for both permanent and temporary staff falling in May, and at a higher rate than in April.
This drove higher competition for workers, causing rates for contract and temporary staff to rise at the quickest pace for six months. Permanent starting salaries also grew sharply, although, illustrating how high recent salary inflation has been, the growth in May was still the slowest for just over two years.
Across England, contractor and temporary billings expanded in London and the South, but declined in the Midlands and the North. Permanent employment actually increased in the North of England, with all other regions showing a decline, and the Midlands typically contracting the fastest.
Demand for permanent staff was greater in the IT & Computing sector than in other industries, followed closely by Engineering.
Neil Carberry, REC chief executive, said: “The jobs market is still creating opportunities for those looking for work. With vacancies rising and starting salaries going up sharply, it is worth people talking to recruiters about that next step in their career. Sectors like IT, engineering and healthcare are hiring strongly, while the North of England showed the best performance in terms of regions.
“Overall, though, the survey again shows what uncertainty does to hiring plans. Total permanent placements fell again this month while temporary billings grew only marginally. Recruiters are reporting that demand for staff is slowing and their clients are reducing business activity on average. Worryingly, these trends are most pronounced in key sectors like retail and construction.”
The figures show that work as a contractor is still viable in certain industries. However, if you’re an independent contractor working in the retail and construction industry, it is more difficult than it has been for a long time to be hired by an employer.
James Stewart, vice chair at KPMG, said: “Brexit uncertainty continues to dampen the jobs market as companies kept their recruitment decisions on hold in May. Permanent staff appointments fell at a slightly faster pace than in April, while subdued confidence ensured that growth in temporary billings hit a six-year low.
“Of increasing concern is that uncertainty is feeding through to weaker growth in job vacancies, while the supply of candidates fell sharply as people are becoming more risk averse with regards to switching roles. Relatively muted trends for permanent staff vacancies were seen across the board, with retail, construction and executive/professional hit particularly badly.
“We expect the labour market to remain in stalemate over the summer as the contest for a new Prime Minister kicks off. Companies are unlikely to make any dramatic investment decisions until a new leader is in place and have more insight on the future direction of Brexit.”
The report is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
20th June 2019.