UK Employment Report - 2020 January - Strongest Rise in Permancent Placements for oer a year.

Improved market confidence leads to strongest rise in permanent placements for over a year

Key points from the survey:

  • Permanent staff appointments increase modestly
  • But temp billings fall for first time since April 2013
  • Permanent staff vacancies rise at quickest pace since last March

The main findings for January are:

 Permanent placement growth picks up in January

UK recruiters signalled a further increase in permanent staff appointments in January amid reports of improved business confidence following the general election. Though modest, the rate of growth was the quickest recorded for just over a year. In contrast, temp billings fell for the first time since April 2013, with a number of recruiters blaming this on upcoming changes to IR35 legislation.

Vacancy growth improves to ten-month high

Overall staff vacancies rose at the quickest pace for ten months in January, with growth largely driven by improved demand for permanent workers. Notably, permanent staff vacancies expanded at the steepest rate since last March, while growth of demand for short-term workers was unchanged from December.

Starting pay increases at softer pace...

Latest data signalled softer increases in starting pay for both permanent and temporary workers in January. Though solid, the latest upturn in permanent starting salaries was the slowest for three and a half years. Temp wage inflation was meanwhile among the softest recorded since late-2016.

...despite further marked drop in candidate supply

Slower rises in starting pay occurred despite a further sharp fall in candidate supply. Although the drop in permanent worker availability eased slightly at the start of 2020, the reduction in temp staff numbers was the most marked since last June.

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation, said:

“It’s good to see that businesses have grown in confidence over the past two months and taken the opportunity to restart hiring. Permanent placements are up again, and demand for staff has risen at the quickest rate for ten months. This is good news for employers, recruiters and candidates – all three can now get on with making the economy flourish in 2020. “But the upcoming IR35 reforms are having a negative impact on the availability and placement of temporary workers. It is vital that people pay the right amount of tax and that the system is fair, but for both of those things to happen we think the government needs to pause and think again on how IR35 changes. The temporary labour market is being stifled, and that’s not good for employers or our economy.”

Commenting on the latest survey results, James Stewart, Vice Chair at KPMG, said:

“Following the UK exit of the EU, there are promising signs that the UK jobs market is finally on the up with the strongest rise in permanent places for over a year – good news for job hunters. “However, with regulatory and trade negotiations all to play for, there is still a long way to go for a deal to be struck and businesses to have the clarity they need. “Brexit is unchartered territory so the reality is the uncertainty will linger, but key investment decisions on hiring need to be made to build confidence and help get the UK back on the path to growth.”

The Report on Jobs is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.

Mosaic Search and Selection Ltd contribute market data to this Report on Jobs which is a monthly publication produced by Markit and sponsored by the Recruitment and Employment Confederation and KPMG LLP.  The full copy of this report is available from Markit.