Decline in hires continues, but at a slower rate

There continued to be a drop in permanent hires during October, although the decline has eased slightly, according to the latest Report on Jobs from the Recruitment and Employment Confederation and KPMG.

This was the 13th successive month to see a reduction in hires, although the rate of decline was at its weakest since June. Temporary billings rose for another consecutive month as employers chose the flexibility of short-term staff in the difficult economic climate.

The availability of candidates improved for the eighth consecutive month, the report found, and this was at a much sharper rate than in September, in part due to the slowdown in permanent hires and reports of redundancies.

That said, permanent starters’ pay remained on an upward trend in October, although the increase was at its weakest rate in just over two-and-a-half years. Recruiters found that employers were making more competitive pay offers to secure the right skills and reflect the higher cost of living.

Temporary wages also increased, although at a slower rate than in September.

Neil Carberry, chief executive of the REC, said the labour market was “waiting for the brakes to be taken off growth by the Bank of England”, referring to a potential future interest rate increase.

“While permanent hiring is now declining more softly, temporary hiring continues to pick up the slack – with billings gently growing for most of this year on the back of rising wages,” he said.

“While the rate of pay growth has now returned to more normal parameters, it is still strong, especially in sectors where staff remain in short supply. That sectoral split is ever more pronounced, with challenging sectors like construction and IT sitting in a very different place to hospitality and healthcare, which continue to be affected by shortages.”

He called for the government to reform agency worker rules so temps in sectors such as healthcare could enjoy on-framework increases.

“This will save government money as they will end up using far fewer emergency shifts, and it will reward a part of the NHS workforce that is too often overlooked,” he added.

Bar Huberman, content manager for HR strategy and practice at XpertHR said employers were concerned about getting the right skills.

“Affordability is not the sole factor behind the drop-off in permanent hires that we have witnessed this year. The labour market remains tight and concerns around organisations’ ability to fill key positions with appropriately-skilled individuals continue,” she said. XpertHR’s recent recruitment survey found that more than three-quarters of businesses suffer from candidate skills shortages.

Huberman added: “During these periods, organisations can invest in the learning and development of their current workforce, to broaden the skill-sets of existing employees.

“Not only does this help to address skill gaps in the organisation without costly recruitment processes, but this commitment to employee development should result in a marked improvement in employee retention, avoiding vacancy challenges in the future.”

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