Job market stalls for first time in two years

The UK job market has contracted for the first time since July 2009 with a reduction in the number of permanent placements, according to the latest Report on Jobs from the Recruitment and Employment Confederation (REC) and KPMG.

The October 2011 report, published today, draws on data provided by recruitment consultancies and shows a marginal drop in permanent appointments, although it also records a continued increase in temporary billings.

According to anecdotal evidence, the drop in permanent placements has been brought about by hesitancy among clients due to the ongoing economic uncertainty.

In contrast to the figures for permanent roles, the report highlighted a further modest increase in billings for temporary and contract staff during October. The pace of growth increased on September’s figures, although it remained subdued compared with the long-term average recorded in previous reports.

The report also found that starting salaries remained broadly unchanged in October, with pay pressures subdued by increased staff availability. Meanwhile, the recent increase in the national minimum wage contributed to solid growth of temporary and contract staff pay.

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Kevin Green, REC chief executive, said: “The slowdown is due to a reduction in public sector employment and weakening consumer and business confidence. Therefore, the Government must do more to help, especially in encouraging small private sector employers to take on young people. We have been calling for this over the past two years but, as the situation is now becoming critical, the Chancellor must address this in his autumn statement later this month.

“However, there is some good news as a result of increased hiring activity in sectors such as technology, engineering and professional services such as accountancy and HR that appear to be bucking the trend. It is also worth noting that employers’ use of temps increased last month – fantastic news following the implementation of the Agency Workers Regulations on October 1. This again demonstrates the importance of the UK’s flexible workforce in helping businesses meet fluctuating demand and keeping people in work.”