Recruitment declines at sharpest rate in over two decades

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April saw record falls in permanent placements and temp activity, the highest rise in staff availability in 10 years and a decline in starting pay.

The latest KPMG and REC, UK Report on Jobs survey found that, overall, permanent staff appointments and temp billings fell at the sharpest rates in the survey’s 22-year history.

The Covid-19 lockdown also led to a record drop in vacancies. Weaker demand for staff also drove renewed falls in starting pay. At the same time, the availability of candidates rose at the steepest rate since 2009 amid a wave of redundancies.

Uncertainty over the outlook, particularly over the length of time needed to contain the virus, led clients to reassess their staffing needs. Vacancies for both permanent and temporary workers fell at the sharpest rates ever seen since the survey began in October 1997.

Accordingly, permanent starting salaries declined at the quickest rate since March 2009, while pay awarded to short-term staff dropped by the greatest extent since July 2009.

The survey found that the north of England experienced the highest rate of decline in permanent staff appointments in April but all four regions saw massive falls and the most severe drops in temp billings since data collection began in October 1997.

Demand for permanent and temporary workers in the private sector saw the biggest fall, although the public sector also saw record declines in vacancies for both permanent and short-term staff.

Unsurprisingly, only nursing and other healthcare roles were unaffected by the decline in April. Hotels & Catering led the way among sectors in terms of decline in vacancies.

James Stewart, vice chair at KPMG, said: “We estimate that as many as 13 million jobs are highly affected by the lockdown, representing just over a third of all jobs in the UK.

“It’s an unprecedented situation for UK business and resilience, then recovery, is key to navigating through the crisis. All eyes will also be on the government’s forthcoming announcement on easing current restrictions so confidence in the jobs market can start to rebuild.”

The figures were not unexpected, said Neil Carberry, chief executive of the REC. Despite the grim scenario, he added, “the capacity for our economy to recover quickly is definitely there – but we won’t get back to strong growth instantly when the lockdown eases. Government needs to work with businesses to ensure that the support they have offered tapers out as the economy returns to normal, rather than leaving firms facing a cliff-edge and having to cut costs quickly through things like higher redundancies. This approach will also allow firms to invest in the future – creating new jobs to drive the economy and help the UK bounce back.”

Any reading on the seasonally adjusted index above 50 indicates an overall increase in recruitment activity compared to the previous month. Below 50 represents an overall decrease. Permanent placements fell from a score of 52.9 in February to just 31.7 in March and now an extraordinary 5.3. In London it fell from 47.5 to just 20.3 in March and now 5.2. Nationwide temporary placements declined from 35.6 in March to just 10.4.

The report is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

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