Sharp fall in demand for permanent staff as recruitment freezes bite

Demand for permanent staff fell at the fastest rate for seven years in July, according to a monthly study of the UK job market.

The Report on Jobs, by the Recruitment and Employment Confederation (REC) and professional services firm KPMG, found that permanent placements fell at the fastest rate since December 2001, while growth of temporary assignments was at its weakest for more than five years.

The Report on Jobs features data collected from a panel of 400 UK recruitment and employment consultancies. Respondents to the survey commented that a slowing economy and associated lack of business confidence had resulted in clients placing recruitment on hold or even looking to downsize workforces.

Lower demand for staff and strongly rising levels of candidate availability was also reflected in weaker growth of wages and salaries, the report said.

Kevin Green, REC chief executive, said: “The report’s latest figures show a continued decline in permanent placements, which has now spread to the traditionally robust temporary jobs market. This is a clear indication that the credit crunch has started to reach the jobs market.

“Business confidence is low and as a result, employers are becoming much more cautious in their approach to recruiting. Following years of a candidate-driven jobs market, the balance has shifted. It could be argued that employers now have the upper hand in an increasingly competitive jobs market.”