HomeBusiness NewsNumber of permanent job appointments falls steeply in London

Number of permanent job appointments falls steeply in London

by LLB Reporter
5th Mar 21 9:28 am

The latest KPMG and REC, UK Report on Jobs survey pointed to a further decline in recruitment activity across London in February, as muted demand for staff due to national coronavirus disease 2019 (COVID-19) lockdown measures led to another sharp fall in permanent appointments. Temp billings also declined during the month, as vacancies for short-term staff fell at the quickest pace since July last year. Meanwhile, company layoffs continued to drive up candidate numbers for both permanent and temporary jobs, although the former increased at the slowest pace for nearly a year amid a reluctance to look for new jobs in the current economic climate.

The London report is compiled by IHS Markit from responses to questionnaires sent to around 100 recruitment and employment consultancies in the capital.

Permanent placements fall steeply

The number of permanent staff appointments in London continued to fall markedly during February, extending the current run of decline to 14 months. The rate of reduction softened slightly from that seen in January, but was still quicker than the UK trend. Surveyed recruiters largely attributed the drop in placements to industries that were shut or severely impacted by national lockdown measures. That said, some panellists saw an uptick in demand for workers in categories such as IT and construction. Regionally, the fall in placements across the capital was only beaten by the South of England in February. The North of England bucked the trend with a solid rise in permanent staff appointments.

Tightened lockdown measures in London had a notable impact on the employment of short-term staff midway through the first quarter of the year. The seasonally adjusted index Temporary Billings Index fell to its lowest level in seven months, and indicated a sharp decrease overall. While the index remained far higher than the level seen during the first national lockdown, it contrasted with UK-wide data which signalled an uplift in temp billings. Moreover, increases were seen across the remaining three monitored English regions, led predominantly by the Midlands.

February data pointed to a further sharp decline in open permanent roles across London, despite the rate of reduction easing since January. The UK also saw a drop in permanent staff vacancies, but only marginally overall. Meanwhile, vacancies for temporary positions in London dropped for a second straight month, with the rate of decline little-changed since the start of the year. This contrasted with a solid rise in temp vacancies at the UK level.

Permanent staff supply growth eases to 11-month low

Adjusted for seasonal variation, the London Permanent Staff Availability Index signalled a solid rise in the number of people looking for permanent jobs in February. That said, this marked the slowest increase in staff availability in the current 11-month sequence of growth, after having eased sharply from August’s recent high. Staff redundancies drove the rise in availability, according to recruiters, but was partially offset by a drop in EU candidates and a reluctance to switch jobs during the national lockdown. Notably, both the Midlands and the North of England saw a renewed drop in permanent staff supply.

After having slowed in each of the last three months, the rate of growth in temporary staff supply across London accelerated in February. The overall increase in candidate numbers was marked and much sharper than the national average. Recruiters highlighted that redundancies in sectors such as hospitality drove the latest rise, with some also noting increased turnover of short-term workers due to IR35. Temp staff supply rose far more slowly across the other monitored English areas.

Slowest fall in permanent salaries for 11 months

The latest survey data continued to indicate softer pay pressures in London midway through the opening quarter of the year. Firms reduced permanent starting salaries for the eleventh straight month, albeit to the weakest extent over this period and only slightly. Moreover, the drop in pay was not as marked as that seen across the UK as a whole, with the South of England and the North of England recording quicker declines. Recruiters seeing a fall in salaries linked this to lower demand for staff due to COVID-19, whereas some found that competition for high-level candidates drove salaries higher.

Wages awarded to newly-placed temporary workers in London continued to fall sharply in February, thereby extending the current run of decline to a year. According to recruiters, lower vacancies and higher candidate supply mostly drove the reduction in pay. The pace of decrease softened slightly from the previous month, however, and was the third-weakest in the aforementioned sequence. At the same time, temp wages across the UK were broadly stable, partially as upticks were recorded across the rest of England.

Commenting on the latest survey results, Anna Purchas, Senior Partner for KPMG in London said, “Jobs activity in London remains on hold as both jobseekers and employers hold their breath in anticipation for Covid restrictions to start to lift in a few weeks.

“London has now seen an unprecedented 14 months of decline in the number of permanent job vacancies available in the UK’s economic powerhouse.

“There’s a long way to go to rebuild confidence in the UK jobs market. But with the Covid roadmap to recovery in place and the Chancellor’s Budget announcement to further support businesses and individuals, there is reason for optimism for the capital’s future workforce.”

Neil Carberry, Chief Executive of the REC added, “Given the national lockdown that has been in place for the past two months, the labour market has coped remarkably well. Permanent placements have only fallen modestly, while vacancies and candidate availability have stabilised. Meanwhile, businesses have continued to use temporary work to help them through this tough period. We are well-positioned for a recovery as restrictions are lifted – but both businesses and workers will need help to do so.

“With that in mind, there was some good news in this week’s Budget. It was sensible to extend support measures like the furlough scheme and business tax deferrals while health restrictions are still in place, and expand support for the self-employed. But more could have been done to tackle the big economic transitions we face, encouraging growth and reducing unemployment. For example, cutting employers’ National Insurance to encourage job retention and creation, replacing the failed apprenticeship levy with a flexible levy that meets the economy’s needs, and investing in job finding services with recruiters at their heart.”

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