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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, shows 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.

Commenting on the latest survey results, James Stewart, Vice Chair at KPMG said, “Overall the labour market has been incredibly resilient over the last couple of years as employers have opted to hire more permanent and temporary staff rather than invest in long term productivity gains.  However, in 2019 Brexit uncertainty is having an opposite and chilling effect on the jobs market, with firms reassessing their level of risk.

“With a decision on Brexit now imminent we’re seeing companies freeze or slow the pace of new hires, whilst at the same time the number of people looking to enter the jobs market has declined further.  Vacancy growth is now back to the levels we saw around two and a half years ago.

“With unemployment at its lowest level since 1975, widespread skills shortages are also cooling the jobs market with the most acute issues to be found in sectors such as IT, engineering, and nursing.  This means candidates with the right skills are commanding ever higher premiums and pay growth is now at a 10-year high.  This has seen pay outstripping living costs, meaning people feel better off.

“Once a political decision is made on Brexit, we expect a wave of pent-up investment to be released in parallel with a renewed focus on cost reduction.  This should result in another busy time for the jobs market later this year.”

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.




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