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Recruitment down as employers turn to temps - 08-05-2008 |
April’s Report on Jobs, from the Recruitment and Employment Confederation and KPMG, showed that the recent divergence between permanent and temporary staff appointments continued at the start of Q2.
While permanent placements fell for the second time in three months, temp billings rose at the strongest rate since last November. Meanwhile, pay inflation continued to slow, reflecting an improvement in the availability of candidates.
Alan Nolan, Director at KPMG comments:
“These latest figures show clearly that employers are shifting away from hiring permanent staff into a more temporary workforce as a way of dealing with the current economic uncertainty and financial crisis. Cost reduction is very much on the agenda of employers not only through the reduction of headcount but also through ways of reducing tax and national insurance contributions. We see this trend most clearly in the financial services sector. On the other hand, in the medical, engineering and construction sector, demand for permanent staff is still strong because of the ongoing skills shortages in these areas.”
Helen Reynolds, Acting Chief Executive Officer, Recruitment and Employment Confederation (REC) comments:
“This month’s Report on Jobs shows that the labour market remains in a delicate state, although there remains a strong demand for temporary workers. This further highlights the crucial resource that agency work provides for employers, as well as the opportunities that it provides for workers. Within this context and in a period of economic instability, now is not the time to introduce legislation that could severely jeopardise the future of temporary work. As the Committee stages of the Private Members Bill on Agency Workers employers and recruiters fear this could have a negative impact on the UK's agency model.
"Equal treatment measures between temps and permanent workers would be almost impossible to work out in practice and would add a completely unnecessary layer of bureaucracy for employers and agencies. This in turn would limit job opportunities for thousands of workers at a time when it is crucial that we keep the labour market ticking in a challenging economy. ”
Permanent placements fell for the second time in three months.
Recruitment consultants reported a modest fall in permanent staff appointments during April – the second in the past three months. Lower placements reflected a further slowing of demand for permanent staff at client companies, with the latest rise in vacancies the weakest since July 2003.
Growth of temp billings strengthened
In contrast to the trend seen for permanent placements, temporary/contract staff appointments increased at the strongest rate in five months during April. Higher temp billings were underpinned by the fastest expansion in short-term vacancies since January.
Pay inflation continued to slow...
Although permanent staff salaries continued to rise in April, the rate of pay inflation eased to only a modest pace that was the weakest in the current fifty-seven month period of growth. Similarly, temporary/contract staff pay increased at the slowest rate since July 2003.
...as supply of candidates improved
Softer labour market conditions were reflected in an improvement in the availability of candidates for permanent jobs for the first time in four-and-a-half years during April. Temporary/contract staff availability rose for the first time in seventeen months.
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