Job market hits seven-year low

UK recruiters have reported the weakest job market for permanent employees since October 2001.

Based on a poll of more than 400 UK recruitment and employment consultancies, the KPMG/Recruitment and Employment Confederation (REC) Report on Jobs said permanent staff salaries were unchanged in September for the first time in over five years of growth. The permanent placements index fell to 41.2 from August’s 41.5, the sharpest fall since 2001, while billings for temporary workers fell to 45.3 from 46.4.

Alan Nolan, director at KPMG, said employers were refusing to invest in skills, choosing instead to make redundancies as part of cost reduction strategies.

“Continuing pressure on both permanent and temporary placements may also see a radical overhaul of how the UK recruitment industry operates,” said Nolan. “This may involve further consolidation, strategic collaboration between agencies and maximum automation of process, as the industry seeks to ride out the storm.”

Kevin Green, chief executive of the REC, called on the government not to remove the VAT staff hire concession, which provides exemption for recruitment services.

“The rapidly worsening economic outlook is now really starting to bite in the jobs market with temporary and permanent appointments dropping rapidly,” said Green. “With demand for workers declining at its fastest pace since October 2001, it is essential that the government ensures that new measures do not exacerbate the trend.

“Removing the concession will add £400m to employer costs at a time when key sectors like charity, financial and health-care can least afford it.”

Meanwhile, temporary staff and contractors need to review their working styles or risk falling behind as employers re-evaluate their staffing levels, a survey suggests.