Firms turn to temporary staffing in June amid UK election uncertainty
Firms turn to temporary staffing in June amid UK election uncertainty
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Permanent placements in June fell at the steepest rate in three months as general election uncertainty and reduced demand for workers in the UK weighed on hiring activity, according to the latest Report on Jobs by the Recruitment and Employment Confederation, KPMG and S&P Global.
At the same time, temporary billings saw a rise as companies looked to temporary solutions for their staffing needs, the report noted.
Reduced placements were seen across England in varying degrees. The steepest fall was seen in the South of England, while the Midlands saw a marginal reduction.
Growth in temp billings was seen in the Midlands and North of England. On the flip side, declines continued to be reported in the South of England and London.
Overall demand for staff continued to fall in June, extending the current downturn to eight months. The rate of contraction was a little steeper compared to May, but the report found it remained modest overall. The contraction was also broadly centred on permanent workers as temporary vacancy numbers increased, although fractionally, for the first time since January.
June’s survey also showed that six out of ten sectors recorded a drop in permanent staff demand. Secretarial/clerical saw the steepest reduction, followed by IT and computing. In contrast, there was strong demand growth in engineering.
In line with permanent staff, temporary vacancies declined in six broad categories in June. The steepest fall was for IT & computing. Where growth was registered, engineering led the way, followed closely by blue-collar.
Meanwhile, the availability of candidates to fill roles continued to increase in June, extending the current period of growth to 16 months. Permanent and temporary staff availability both rose sharply, though in each case to lesser degrees than in May. Recruitment consultants reported that the latest increase in the supply of staff reflected a combination of redundancies, slow decision-making amongst clients and a lower number of job openings.
Amid reports of a lack of suitable candidates, in addition to a recognition of the ongoing cost of living pressures for workers, permanent staff salaries increased again in June. Moreover, the rate of inflation was the steepest recorded by the survey since last October. Temporary staff pay also rose, albeit to the weakest degree for three months.
In a press release, Neil Carberry, REC chief executive, said, “Recruiters report companies delayed some permanent hiring decisions during the election campaign. Now a new government has been elected, recruitment firms are looking for that investment to be unlocked.”
“The return of temporary worker demand to positive territory, driven particularly by the Midlands and North, is a sign that the gentle improvement of the last few months is still with us despite the political noise,” Carberry added. “As policy uncertainty abates and interest rates drop, we expect permanent hirers to return to the market this summer.”
“The incoming government has been clear that growth and prosperity will be their core goal,” Carberry continued. “But only business can deliver this for them, a partnership is necessary. Working with business to make sure the new deal for workers is delivered in a way that businesses can adopt, and which supports the agility workers and employers need, is key. As is reforming the flawed Apprenticeship Levy. There can be no successful industrial strategy that does not have a stable workforce strategy at its heart.”
Jon Holt, chief executive and senior partner of KPMG in the UK, said, “Despite robust national employment data, the latest survey results indicate that employers are still hitting the brakes on recruitment with the general election period causing some uncertainty. Permanent hiring has taken a particular hit as companies either delay or focus on temporary appointments. This lack of demand means competition for the few roles available continues to drive pay growth.
“There are signs of momentum in the UK’s economic outlook with overall inflationary pressure easing and consumer confidence growing as we look towards potential interest rate cuts in the coming months,” Holt said. “Our economy is slowly turning a corner and the key task for this new Government is to create fiscal policy that improves both long-term macroeconomic conditions and creates stability. This will deliver increased confidence for business investment in the UK - accelerating growth, including in the jobs market.”