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UK – Permanent staff appointments see fastest decline since 2016 as Brexit-related uncertainty intensifies

05 April 2019

Permanent staff appointments by recruitment consultancies in the UK in March declined at the quickest rate since July 2016 amid uncertainty related to the UK’s decision to leave the EU, according to the latest Report on Jobs from IHS Markit/REC (Recruitment and Employment Confederation) and professional services firm KPMG. The fall in permanent placements in March was also the second decline in three months.

According to panellists, Brexit-related uncertainty led to recruitment freezes and delays to decision making. Candidate shortages were also cited as having dampened permanent staff appointments.

At the same time, billings received from the employment of short-term staff rose at the second-slowest rate for two-and-a-half years. Growth was linked to relatively strong demand for temporary workers, while there were also reports of greater usage of contract staff due to low availability of permanent workers.

“Brexit has been sapping business confidence for months, and now it is causing the jobs market to grind to a halt,” James Stewart, Vice Chair at KPMG, said. “With unclear trading conditions ahead, many companies have decided to hit the pause button on new hires and reduce their dependency on temporary appointments.”

REC’s data also pointed to softer increases in demand for both permanent and temporary staff. Although vacancies continued to rise strongly in both categories, the respective indices fell to their lowest levels in 31 months. Furthermore, growth of demand for both types of staff remained below their long-run trends.

The REC’s Jobs Vacancies Index posted above the neutral 50.0 level, at 55.5 in March, to signal a further strong increase in staff vacancies. However, the reading was down from 57.0 in February to its lowest level since August 2016.

Demand for both permanent and temporary workers in the private sector continued to rise strongly in March, although at weaker rates than seen in February. Permanent public sector vacancies declined, while temp worker demand in the sector rose slightly.

Among permanent vacancies, IT & Computing and Engineering topped the rankings for permanent staff demand at the end of March. Nursing/Medical/Care saw the strongest increase in demand for temporary workers in March.

Meanwhile, the availability of candidates continued to fall sharply in March, with the rate of contraction quickening slightly since February. Permanent staff supply declined further in March while the number of temporary candidate saw a softer, but still steep, reduction.

REC’s report found that the combination of lower candidate availability and strong demand for staff led to further increases in pay.

Average starting salaries for candidates placed in permanent roles continued to rise sharply in March. Hourly rates of pay for staff in temporary/contract employment also rose further at the same time.

Neil Carberry, Chief Executive of the REC, commented, “Ending the uncertainty around Brexit will help firms invest and create jobs. Firms across the country need a stable plan that tells them where they will be next year – not next week.”

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