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Permanent staff appointments decline amid uncertain outlook

Neil Carberry

Rising economic uncertainty and ongoing candidate shortages weighted on UK labour market performance at the start of 2019. Contributor Neil Carberry, Chief Executive – Recruitment & Employment Confederation.

The report, which is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies, showed that workers placed into permanent roles declined for the first time since mid-2016 during January, whilst growth in demand for staff softened to its lowest in over two years.

Latest data also showed that worker availability to take up new roles continued to decline. This was primarily linked to high UK employment levels, but also hesitancy amongst workers to switch positions given heightened Brexit uncertainty. Pay pressures subsequently remained high, with salaries and temp wages both increasing strongly since December. 

Renewed fall in permanent placements
Looking at the latest survey results in greater detail, recruitment consultants registered the first drop in permanent staff appointments for two-and-a-half years in January amid concerns over Brexit and a further deterioration in candidate availability. Temp billings meanwhile rose at the joint-slowest pace in nearly six years of continuous growth. 

Whilst demand for staff remained strong at the start of 2019, overall vacancies increased at the slowest pace for 27 months. Notably, softer increases in demand were signalled for both permanent and temporary workers during January. 

Candidate supply falls at quickest pace for 20 months sustaining pay pressures
The number of people available to take up new roles continued to decline sharply in January. Shrinking labour supply was often linked to high employment in the UK, as well as hesitancy among potential candidates to move roles amid Brexit-related uncertainty.

With vacancies rising and labour supply falling further, starting pay continued to increase sharply in January. Notably, permanent starters’ salaries and temp wages both rose at historically strong rates. 

Regional and Sector Variations
Data split by English regions showed that permanent placements fell in the Midlands, the North of England and London, with modest growth evident in the South of England. Temp billings increased in the Midlands and the South of England but fell in the North of England and London. 

Meanwhile, a softer rise in demand for staff in the private sector occurred alongside a renewed fall in public sector job vacancies during January. In the private sector, growth of demand for permanent and temporary workers edged down to a 29- and 72-month low, respectively. Meanwhile, vacancies fell marginally for both permanent and temporary public sector staff. 

The steepest increase in permanent staff demand was seen for Accounting/Financial, followed by Engineering and IT & Computing. The only sector to register lower permanent job vacancies was Retail. Hotel & Catering topped the league table for demand for temporary staff in January, closely followed by Nursing/Medical/Care. Vacancies also rose across all other job sectors, with the weakest expansion seen in Retail.

Neil Carberry, Recruitment & Employment Confederation 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. 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.”

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