Employers opt for temporary hires in uncertain economic climate

Demand for permanent staff is slowing as employers continue to favour a flexible workforce, research has shown.

The monthly Report on Jobs for March signalled a modest rise in permanent staff appointments following February’s slight decline. Overall demand for staff increased at the weakest rate for 55 months.

However, salary inflation eased to a two-and-a-half year low, reflecting weaker growth of demand for staff and easing skill shortages. Temporary staff appointments continued to grow.

The Report on Jobs is published by the Recruitment & Employment Confederation (REC) and professional services firm KPMG.

KPMG director Alan Nolan said: “The banking crisis is clearly taking its toll. The financial sector as well as IT and computing are among the sectors where demand for both permanent and temporary staff is weakest.

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“However, fears are growing that jitters in the City will have a knock-on effect on other sectors. No matter what sector, employers are becoming increasingly cautious about the outlook. Demand for staff is slowing and employers are hedging their bets with more emphasis on temporary hires, while pay pressures are easing somewhat.”

Helen Reynolds, acting chief executive at the REC, said: “Employers are dealing with the economic uncertainty by keeping close check of salaries, as indicated by permanent staff wage inflation coming in at a two-and-a-half-year low.”