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Uncertainty Weighs on Hiring and Staff Availability in February

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The latest KPMG and REC, UK Report on Jobs, showed that the UK labour market registered a relatively lacklustre performance in February, with uncertainty regarding the outlook weighing on hiring and staff availability.

The report, which is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies, indicated that the number of people placed into permanent job roles was unchanged in February, following a slight fall at the start of 2019. In contrast, billings received from the employment of temp workers increased at a faster pace.

Recruiters generally linked subdued employment trends to an uncertain outlook and candidate shortages. Overall candidate supply continued to fall markedly in February, while staff vacancies expanded at the slowest rate for nearly two-and-a-half years. Low candidate availability nonetheless contributed to further strong increases in both starting salaries and temp wages in February.

Neil Carberry, Recruitment & Employment Confederation chief executive, said:

“The resilience of employers and the British jobs market shines through in today’s Report on Jobs. While numbers are clearly weaker than we have seen over the past few years, the survey suggests businesses are ready to create jobs if the investment environment is right.  Recruiters are playing a crucial role in helping their clients fill gaps. With permanent vacancies rising in all sectors, the strongest demand is for IT and computing staff.

“As we draw closer to Brexit day, uncertainty and concern has grown, putting the sustainability of positive jobs news at risk. Firms are looking for politicians to find a solution to the current deadlock that gives them the certainty they need to invest and create jobs.

“In a separate survey of REC members this week, nearly half (45%) of respondents said that their biggest leadership challenge in dealing with Brexit was reassuring workers, candidates and staff.

“REC members are looking to the Chancellor to use next week’s Spring Statement to inject stability and long-term thinking into our economic debate. A commitment to proper flexibility in the skills levy, an open but controlled approach to immigration after Brexit, and changes to government plans on contractor tax to protect compliant businesses are top of recruiters’ agenda.”

Permanent placements stabilise in February

After a marginal drop at the start of the year, permanent staff appointments were unchanged in February. The broadly stagnant trend for the year so far contrasts with steep increases through 2018, with some panellists indicating that uncertainty around Brexit and a lack of suitably skilled candidates impacted on hiring. At the same time, temp billings rose at a steeper rate, after increasing only slightly in January.

A high employment rate across the UK, and hesitancy among workers to seek out new roles amid an uncertain outlook, led to a further steep drop in overall staff supply in February. Despite easing since January, the deteriorations in both permanent and temporary worker availability remained historically sharp.

Vacancies expand at slowest rate for 29 months

Although demand for staff continued to rise markedly, the rate of vacancy growth edged down for the second month running to a near two-and-a-half-year low. Softer increases in demand were signalled for both permanent and temporary staff in February.

Latest data pointed to a further sharp rise in starting salaries, with employers generally having to up pay offers to attract and secure candidates. That said, the latest increase was the softest seen for seven months. Temp wage inflation meanwhile eased to a 13-month low.

Regional and Sector Variations

On a regional basis, greater permanent staff appointments in London and the South of England helped to offset falls in the Midlands and North of England. Renewed increases in temp billings were seen in London and the North of England, while growth was sustained in the Midlands and the South of England.

Demand for both private and public sector staff increased during February. Sharp increases were seen for both permanent and temporary job openings in the private sector. Modest growth of demand was meanwhile seen for permanent and short-term staff in the public sector, following reductions in January.

Permanent staff vacancies rose across all ten monitored categories during February. The steepest increase in demand was signalled for permanent IT/Computing workers, while the weakest was registered for Construction staff.

Nursing/Medical/Care topped the rankings for temporary staff demand midway through the first quarter. Vacancies also grew across the other categories monitored by the survey, with the exception of Retail.

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