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UK – No job recovery in sight as temp billings go down?

11 April 2012

Permanent staff placements have increased for the third month in a row but temp billings have declined, finds the Recruitment and Employment Confederation (REC) and KPMG Report on Jobs. While there are grounds for optimism, the report highlighted that job recovery remains fragile and could all “be blown off course,” commented partner at KPMG, Ronnie McCombe.

The report highlighted that recruiters have seen an increase in permanent staff placements in March, although this was at slower pace when compared to the previous month. Sectors such as IT & Computing and Engineering/Construction performed particularly well.

“We have seen a rise in permanent appointments every month in the first quarter of 2012 with vacancy growth now at an eight-month high. This is good news for job-seekers and a positive indication of increasing employer confidence. Recent tax changes announced in the Budget, the Youth Contract and reductions in red tape for businesses, that came into effect this month, should further boost employer confidence and accelerate hiring activity,” said Tom Hadley, Director of Policy and Professional Services for the Recruitment and Employment Confederation.

But things were not looking so rosy for temporary placements as temporary/contract staff billings decreased, showing the fastest drop in short-term appointments for over two-and-a-half years. The report also indicated that the Agency Worker Regulations (AWR) had an impact on the temp to perm conversion rate as employers had chosen to take temporary workers on as permanent employees. Indeed, “the rise in permanent placements appears to stem from employers simply switching temporary workers to permanent status due to the higher entitlements that the Agency Worker Regulations have given them,” said Mr McCombe.

Mr Hadley further explained that “This month’s data shows a slight decline in appointments of temporary workers. This may in part be linked to employer uncertainty over the Agency Worker Regulations, although it could mainly be due to the fact that increasing business confidence has resulted in more employers being prepared to take on permanent hires rather than temporary or contract staff. The benefits of flexible staffing arrangements are well established and other REC data provides some positive indications in terms of the outlook for temporary work in the UK.”

Demand for staff also increased in March, driven by a stronger increase in permanent job vacancies, which triggered slower growth in the number of short-term roles. But candidate availability slowed down as the growth of permanent staff availability almost stagnated in March while temporary/contract staff availability went up – but this was at the weakest rate since August last year.  

When looking at starting salaries for permanent hires, this remained more or less flat, following last month’s decline. However, temporary/contract staff saw a modest pay rise, another impact of the AWR. 

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