Permanent Staff Appointments Rise As Demand For Workers Begins To Recover
The latest KPMG and REC, UK Report on Jobs: North of England survey pointed to a renewed rise in permanent staff appointments during December. The result came amid the first increase in demand for permanent staff since February. Meanwhile, temp billings continued to increase, with the rate of growth accelerating to the quickest since May 2016. On the pay front, permanent starters’ salaries continued to fall, while temporary wages increased only modestly. Downward pressure on pay was partially due to another marked increase in labour supply.
Permanent placements and temp billings both increase
First rise in permanent vacancies since February
Growth of labour supply continues to ease
Data collected December 4-17
The report, which is compiled by IHS Markit, is based on responses to questionnaires sent to around 100 recruitment and employment consultancies in the North of England.
Renewed rise in permanent staff appointments
Following the first reduction for three months in November, there was a renewed increase in permanent placements across the North of England during December. Although the rate of increase was modest overall, it was stronger than the UK average. Recruiters often noted a broad-based rise in demand for workers at their clients. At the national level, permanent placements increased following two successive monthly declines. Across the four monitored English regions, the sharpest expansion was recorded in the Midlands.
"...the jobs market should be boosted by the impending vaccination roll-out, the added impetus from government investment in low carbon infrastructure..."
December data pointed to another marked rise in temporary billings in the North of England. In fact, the rate of growth was the sharpest for just over four-and-a-half years and the quickest across the four monitored English regions. Anecdotal evidence indicated that demand for workers strengthened across a variety of sectors. Across the UK as a whole, temp billings across rose for the fifth month running, with the rate of increase the quickest since October 2018. London was the only monitored region to see a decline in temp billings at the close of the fourth quarter.
Demand for both permanent and temporary staff in the North of England increased during December. The rise in permanent vacancies was the first for ten months, with the rate of growth outpacing that seen at the national level. Meanwhile, temporary job postings increased for the fourth month running. The latest rise in demand for temporary staff was the quickest since May 2019 and the sharpest recorded across any of the four monitored English regions.
Growth of permanent labour supply continues to ease
Recruiters in the North of England recorded a further increase in permanent staff availability in the final month of 2020, extending the current run that began in February. However, the rate of growth eased for the fourth month running to reach the softest since April. Of the four monitored English regions, London registered the sharpest improvement in permanent candidate availability.
Although the availability of temporary staff in the North of England continued to rise sharply in December, the rate of growth eased to the softest since March. The latest increase was, however, quicker than the UK-wide average. Some recruiters commented that the higher supply of temporary workers was linked to redundancies driven by the coronavirus disease 2019 (COVID-19) pandemic. Across the four covered English regions, London recorded by far the steepest upturn in temp staff availability, and the Midlands the weakest.
Permanent starters’ salaries continue to decline in December
Starting salaries awarded to permanent workers in the North of England fell for the ninth month in succession during December. The rate of decline was slightly quicker than in November, but remained modest overall. Anecdotal evidence suggested that demand for workers remained relatively subdued compared to the volume of job seekers. In contrast, salaries awarded to permanent new joiners across the UK rose for the first time since March, although the rate of inflation was only fractional. There was noticeable disparity at the regional level in December, with the overall increase in starting salaries driven by an upturn in the South of England.
Remuneration for temporary staff in the North of England increased for the first time in three months at the end of 2020. Moreover, the rate of wage inflation was the quickest seen since February and slightly faster than the UK average. Across the four monitored English regions, the Midlands recorded the sharpest rate of temp wage inflation. Meanwhile, London saw temp pay decline for the tenth month running.
Commenting on the latest survey results, Euan West, office senior partner for KPMG in Leeds, said:
“While the rise in both temporary and permanent placements across the North during December would ordinarily have been cause for cautious optimism, the latest national lockdown will no doubt bring renewed economic uncertainty and another possible decline in permanent staff recruitment. That said, the jobs market should be boosted by the impending vaccination roll-out, the added impetus from government investment in low carbon infrastructure, and the potential of the levelling up agenda. Northern firms and jobseekers will be keenly awaiting the benefits of all three.”
Neil Carberry, Chief Executive of the REC, said:
“The underlying strength of the British economy shone through in the December jobs figures. The biggest expansion in temporary recruitment since October 2018 shows how important the flexible jobs market is to that performance. Growing permanent placements and starting pay also emphasised the resilience of our economy.
“The important thing now is to maintain as much of that momentum as possible through the new lockdown. With business cashflows under renewed pressure, helping employers protect and create jobs is essential. We need a long-term plan to support businesses across the supply chain – not just those required to close. This should include wider-spread reductions on business rates, support on VAT repayments and support for self-employed business owners previously cut out of schemes. We need big ticket items now, like a reduction in the cost of furlough and employers National Insurance to help firms retain and hire staff in the coming months, alongside delivery of the vaccine.
“Regions have been recovering at different speeds and London continues to lag behind. London is home to some of the most deprived boroughs in the country, so this is particularly worrying. It underlines the urgency of action needed to help businesses retain workers and get the vaccine delivered.”