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UK – Permanent placements fall for first time since 2016 amid Brexit uncertainty

08 February 2019

Permanent placements in the UK have fallen for first time in two-and-a-half-years in January 2019 amid concerns over Brexit and a further deterioration in candidate availability, according to the latest Report on Jobs from the Recruitment and Employment Confederation and KPMG.

The report showed that companies were becoming increasingly hesitant to take on new staff due to uncertainty surrounding Brexit. At the same time, panellists also indicated that shortages of candidates had dampened placement numbers.

Meanwhile, temp billings increased at its joint lowest pace for 69 months. Recruitment agencies mentioned that uncertainty regarding the outlook and a general slowdown in market conditions had dampened the overall rate of growth.

January’s data showed that demand for staff continued to increase sharply for both permanent and temporary workers, however growth of job vacancies softened to 27-month lows in both cases. The Report on Jobs Vacancies Index fell from 60.0 to 59.2 at the start of 2019.

A softer rise in demand for staff in the private sector occurred alongside a renewed fall in public sector job vacancies during January.

Neil Carberry, Recruitment & Employment Confederation chief executive, commented, “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,” Carberry said. “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.”

The report also showed vacancies by sector, with the steepest increase in permanent staff demand recorded in Accounting/Financial, followed by Engineering and IT & Computing. Hotel & Catering topped the league table for demand for temporary staff in January, closely followed by Nursing/Medical/ Care.

The overall supply of available workers continued to decline across the UK at the start of 2019, with the rate of deterioration accelerating to a 20-month record. Steeper falls in candidate availability were seen for both permanent and temporary workers.

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.

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