Yorkshire Times
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12:00 AM 9th July 2024

Permanent Jobs Market Worsens As Preference Shifts To Temporary Staff

KPMG and REC, UK Report on Jobs: North of England
Image: Pixabay
Image: Pixabay
The latest KPMG and REC, UK Report on Jobs: North of England survey saw the number of staff placed into permanent roles decrease sharply, while temp billings increased, highlighting a preference for workers on temporary contracts in the North of England. Demand for short-term employees also strengthened, as vacancy growth for temp staff accelerated and was strong overall. Meanwhile, the increase in job openings for permanent role was solid and softer than in May.

The latest survey data also suggests that supply of permanent staff outweighed demand, with recruiters often linking this to redundancies. With that, pay growth cooled, but was nevertheless elevated by historical standards.

The KPMG and REC, UK Report on Jobs: North of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the North of England.

Fastest decrease in permanent staff appointments for ten months

There was a sharp drop in the number permanent placements registered by recruitment agencies in the North of England in June, thereby extending the current downturn to a year. Moreover, the rate of contraction was the fastest for ten months and more pronounced than the solid decline at the UK level. Anecdotal evidence linked the decrease to hiring hesitancy, which was commonly attributed to the upcoming general election.

Recruiters in the North of England posted a rise in billings for temporary staff in June, thereby marking the second increase in successive months. Moreover, growth in temp billings was the quickest for 15 months. Firms were reportedly relying on temporary staff amid hesitancy to commit to permanent contracts. Regionally, only the Midlands registered a sharper rise in temp billings than the North of England in June, with contractions recorded elsewhere.

For the fourth month in a row, the North of England saw the number of vacancies for permanent roles rise. Demand for permanent staff rose solidly in June and largely in line with that of May. The North of England was the only monitored region to post vacancy growth.

There was also a strong rise in job openings for temp staff in June, as has been the case in the other months of the second quarter. Vacancy growth picked up to a 14-month high and was the quickest of the four monitored English regions.

Trend of rising permanent staff supply extended to six months

The number of candidates looking for permanent roles picked up again in the North of England, as has been the case since the start of 2024. The rate of expansion eased on the month, but was nevertheless substantial and historically elevated. Panel member reports suggested that availability had increased in part due to redundancies. Others mentioned that job seekers were not suitably skilled. The local increase in supply was line with the UK average.

June survey data pointed to a further increase in the supply of temporary workers, according to recruiters in the North of England. The rise in temp staff availability was the fastest seen for just shy of a year and steep overall. Survey respondents noted that demand for short-term staff had picked up. The rise in the number of temporary candidate available for work in the North of England outpaced that for the Midlands, but lagged the other monitored English regions.

Sustained sharp rise in starting salaries in June

The seasonally adjusted Permanent Salaries Index for the North of England posted above the crucial 50.0 mark for the fortieth consecutive month in June, to signal a further rise in starting salaries. Though sharp, pay growth eased on the month. The increase reportedly reflected attempts to attract skilled workers. London was the only monitored English region to registered faster growth of starting salaries than that seen locally.

Recruiters across the North of England pointed to a further uptick in hourly pay for temporary staff in June, thereby stretching the current run of inflation to seven months. The rise in temporary wages was linked to the increased cost of living in panel member reports. While growth of temp pay was the slowest for three months, it was nevertheless sharp and historically elevated. The uplift across the North of England was also the fastest of the four monitored English regions for the fifth month running.

Phil Murden
Phil Murden
The permanent jobs market continues to suffer from ongoing uncertainty as businesses are choosing to focus on short-term staffing solutions by looking for temporary workers.

Candidates who are looking for roles will be hoping the formation of a new Government will bring businesses some increased certainty when it comes to their hiring decisions, but just how long it takes for confidence to bounce back remains to be seen.
Phil Murden, Office Senior Partner for Leeds at KPMG UK

Neil Carberry
Neil Carberry
Recruiters report companies delayed some permanent hiring decisions during the election campaign. Now a new government has been elected, recruitment firms are looking for that investment to be unlocked. The return of temporary worker demand to positive territory, driven particularly by the North, is a sign that the gentle improvement of the last few months in the UK is still with us despite the political noise. The growth in temp billings was the quickest for 15 months, after all. As policy uncertainty abates, and interest rates drop, we expect permanent hirers to return to the market this summer.

The incoming government has been clear that growth and prosperity will be their core goal. But only business can deliver this for them – a partnership is necessary. Working with business to make sure the new deal for workers is delivered in a way that businesses can adopt, and which supports the agility workers and employers need, is key. As is reforming the flawed Apprenticeship Levy. There can be no successful industrial strategy that does not have a stable workforce strategy at its heart.
REC Chief Executive Neil Carberry