Organisations are opting for the flexibility of temporary workers rather than offering permanent jobs, new data has revealed.
The continuing economic effects of the pandemic and a second national lockdown in England in November saw demand for permanent employees fall for a second consecutive month after recovering slightly over the summer.
Impact of Covid on jobs and pay
According to the latest KMPG and Recruitment and Employment Confederation (REC) Report on Jobs, the permanent placements index was 48.2 while the temporary billings index was 56.1. A reading below 50 indicates a decline in activity compared to the previous month.
REC chief executive Neil Carberry said: “With lockdown measures in place in England last month, the slowdown in both demand for and placements of permanent staff is unsurprising – although the scale of it is much smaller than earlier in the year.
“Feedback from REC members indicates that employers are still looking to hire, with a lot of demand for permanent staff displaced to January as firms hope the Covid crisis is easing. For now though, temporary work continues to help businesses operate and people find jobs – some positive news as we head towards Christmas.”
Recruiters indicated that the supply of permanent workers rose for the eighth consecutive month in November, although weakening to a six-month low. The permanent staff availability index was 71.4 across the UK, while the temporary worker availability index was 68.5 – also lower.
Starting salaries remained on a downward trend, which recruiters who took part in the research put down to the rapid rise in candidate supply and the subdued demand for workers.
London recorded the quickest drop in pay, followed by the South of England. Temporary worker wages reduced across all parts of England.
Only two of the 10 monitored job categories experienced higher demand for permanent workers in November – IT and computing and engineering. The lowest demand for workers was seen among hotel and catering and retail firms.
KMPG vice chair James Stewart said: “Looking ahead, there is reason for optimism with the welcome vaccine news, although challenges remain as the recent lockdown, new tier system and impending Brexit means it will be a long road back to the UK jobs market seen pre-Covid.
“While the extension of the furlough scheme may give the government some breathing space, it needs to continue to support UK business and offer jobseekers the means to retrain and upskill, helping the recovery in jobs and reviving the UK’s productivity growth.”
The data for the report was compiled by IHS Markit from responses to questionnaires sent to around 400 UK recruitment and employment consultancies.