FURTHER FALL IN PERMANENT PLACEMENTS

May’s “Report on Jobs”, from the Recruitment and Employment Confederation and KPMG, suggested that employers retained a preference for flexible workforces in the face of uncertainty over business conditions. While permanent staff placements declined again, temp billings continued to rise at a solid pace. Pay growth was again constrained by slowing demand for staff, while the availability of candidates continued to improve.     

Alan Nolan, director at KPMG, commented: “These latest figures confirm a trend we have seen emerging over the last couple of months. In the current economic slowdown employers continue to look towards the flexible labour market as a way to cut costs rather than taking on staff permanently. With city redundancies contributing to a growing pool of labour and increases in the cost of living forcing some families to find a second income, employers currently hold the upper hand in the job market.”

The report provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers. The research showed that:

• Permanent placements declined again but temp billings continued to rise – Amid an uncertain economic climate, companies continued to opt for flexibility in their staffing needs during May, according to the latest survey of recruitment consultancies. While permanent staff placements fell for the third time in four months, temporary/contract staff billings posted a further solid increase.

• Growth of job vacancies slowed further – Latest data showed that demand for staff continued to soften in May, with overall  job vacancies rising at the weakest rate in the current fifty-nine month expansionary cycle. Slower growth of demand was recorded for both permanent and temporary employees.

• Stronger improvement in candidate availability – Concurrent to the weaker trend in permanent employment was a second consecutive monthly rise in candidate availability, with the rate of improvement accelerating since April. Temp availability also increased at a faster pace, which survey respondents in part linked to people seeking additional household income in the wake of the credit squeeze.  

• Pay pressures remained muted – Growth of permanent staff salaries was subdued in May, albeit stronger than April’s recent low. Meanwhile, inflation of temporary/contract staff pay moderated to the weakest in fifty-eight months.  

Kevin Green, chief executive, Recruitment and Employment Confederation (REC), said: “The credit crunch is continuing to slow permanent job growth, however employers still need to resource. An increasing number of companies are using temps as a way to ride the storm. Every week, 1.3 million temporary workers are keeping business in the UK moving.  Temp and contract work provides vital opportunities for workers which is why it is crucial that the detail of the proposed EU Agency Workers Directive which is being discussed in Luxembourg next week does not impact on the viability of the UK temp model.”