Permanent staff appointments increase solidly in June

Fri, July 5th, 2019

The latest KPMG and REC, UK Report on Jobs: North of England signalled a slow...

 Permanent placements increase solidly in June, as temp billings fall slightly

• Solid rise in permanent staff placements
• Permanent candidate availability falls at softest rate in eight months
• Starting salaries increase sharply

The latest KPMG and REC, UK Report on Jobs: North of England signalled a slower rise in permanent placements during June, while temp billings declined further.

The report, which is compiled by IHS Markit from responses to questionnaires sent to around 100 recruitment and employment consultancies in the North of England, pointed to a softer, but still solid, rise in permanent staff placements in June. This contrasted with a marginal fall in temp billings. Meanwhile, another marked reduction in candidate supply contributed to sharp increases in starting pay.

Permanent placements rise solidly in June

The number of permanent staff appointments in the North of England increased solidly over the course of June, although the rate of growth was softer than that seen in May. Panellists that reported an expansion related this to strong demand for staff across multiple sectors. At the same time, recruitment consultancies across the UK recorded a fourth consecutive monthly reduction in permanent staff placements, as the other three monitored English regions saw declines.

For the second consecutive month, Northern recruitment consultants signalled a drop in temporary staff billings. However, the decline in June was notably weaker than in May, and marginal overall. Anecdotal evidence partly linked the fall in billings to a shift to permanent job roles. However, other recruiters saw increased demand for temporary staff during the month. Temp billings meanwhile rose slightly at the national level. Despite quickening from May, the rate of growth was the second-weakest in the current 74-month sequence of expansion. Higher temp billings in London and the South of England contrasted with slight declines in the Midlands and North of England.

Vacancies for permanent staff in the North of England continued to rise sharply at the end of the second quarter. The increase was softer than the 21-month high recorded in May, but remained stronger than the average for the UK. Similarly, the amount of unfilled temporary roles grew at a less marked pace in June compared to May, despite remaining quicker than the UK-wide trend.

Slowest fall in permanent staff availability in eight months
Latest survey data signalled another sharp fall in permanent staff availability in the North of England in June. That said, the rate of decline slowed to the least marked since October 2018. As with past months, recruiters found that Brexit-related uncertainty made people unwilling to change jobs. Skill shortages were also attributed to the fall in candidate numbers. Across the UK, permanent labour supply deteriorated in June. The rate of decline remained much quicker than the historical average, as all surveyed English regions registered an overall drop in candidate availability.

Recruiters in the North of England saw only a slight drop in the availability of temporary staff in June. It was the weakest decline recorded in the current 69-month sequence of deterioration. Some panellists continued to report a lack of skilled workers in the jobs market, reducing staff supply. Others meanwhile found that new technology and improved marketing helped to find temporary candidates for roles. Short-term staff availability across the UK dropped at a slightly less marked pace in June, although the overall decline remained sharp. Of the four monitored English regions, London saw the quickest rate of contraction.

Starting salaries rise sharply in June

Salaries for new permanent staff in the North of England increased at a steep pace during June. The rate of inflation was broadly similar to the recent trend, only slightly softer than that seen in May but narrowly beating the UK average. Pay generally increased due to a shortage of candidates in the region, panellists noted. At the national level, the Midlands recorded the quickest rise in permanent starting salaries, while London continued to register the slowest increase.

Broadly in line with May's result, wages for short-term workers in the North of England increased sharply in June. Recruiters found that this was often caused by a lack of candidates for temporary roles. The rate of inflation matched that seen for the UK as a whole, which recorded the fastest rise in average hourly pay rates since last November. Faster wage growth was also recorded in the Midlands, while London and the South of England saw weaker increases in pay.

Commenting on the latest survey results, Euan West, Office Senior Partner at KPMG in Liverpool said:
“There was a slowdown in recruitment activity across the North midway through 2019 as political and economic uncertainty persisted. Dented confidence and a more cautious approach to hiring from local firms has slowed permanent appointments and pushed temporary hires into reverse. Likewise, candidates will be increasingly reluctant to change roles until they can make more informed decisions on their futures and get a better view on the health of the economy.”

Recruitment & Employment Confederation chief executive Neil Carberry said:
“It’s no surprise that the jobs market has slowed a little in this time of uncertainty – but vacancy numbers remain high and there are still opportunities out there for people looking for their next step. Pay is rising too. Nevertheless, the gentle slowdown in temp billings and slower growth of permanent hiring is a reminder to all politicians that businesses and employees across the country are looking for a smooth path to a negotiated Brexit outcome.

“One issue which shows no sign of relenting is the shortage of qualified candidates in some areas, as availability of both permanent and temporary workers remains tight. Roles such as LGV and forklift drivers, healthcare assistants, as well as manufacturing and production staff are consistently listed as being in short supply.

“Agencies employing temporary workers do all they can to train them to fill these vacancies, but this is made more difficult by the constraints of the apprenticeship levy. It is high time that this policy was reformed. By allowing agencies to fund high-quality training for temps using the levy they pay, the government could provide progression opportunities for flexible workers, tackle the country’s skills shortages and boost the productivity of our economy.”

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