Recruitment growth continues to slow

2002

Redundancies are fuelling a rise in the numbers of qualified staff on the recruitment market and leading to a decline in the rate of salary increases. But demand for temporary staff is at a new high. So says the Report on Jobs, published on August 6 by the Recruitment & Employment Confederation and Deloitte & Touche.

Growth of permanent placements slows
The monthly survey of recruitment consultants showed that permanent placements rose for the fifth successive month in July. However, the rate of growth eased to a three-month low and remained far weaker than seen prior to the downturn of mid-2000. Employers were reported to have grown increasingly cautious when hiring new staff with the current economic outlook remaining uncertain. Meanwhile, temporary staff billings rose for the seventh month running in July. Despite easing to a three-month low, the rate of growth of billings again exceeded that seen for permanent placements as clients maintained their preferences for flexible workers.

Despite the rise in staff placements, further redundancies during the month caused the CIPS Employment Index (which tracks actual staffing levels via surveys of employers) to record a net decline in private sector employment for the fourteenth consecutive month in July. Moreover, the rate of contraction of employment picked up for the second month running to the fastest since March.

Growth of demand for staff eases
Weaker growth of permanent placements and falling employment reflected a further faltering in the rate of growth of demand for staff, as signalled by the Report on Jobs Vacancies Index in July. The Index (which monitors demand for staff at recruitment consultancies) pointed to the sixth consecutive monthly increase in demand for staff, but the rate of growth eased to the slowest since March, driven down primarily by slower growth of demand for permanent staff. Demand for temporary staff, by contrast, rose at the fastest pace for seventeen months.

Meanwhile, the Press Recruitment Advertising Index indicated a drop in demand for staff at the upper end of labour market for the eighteenth successive month in June. At 30.6%, the annual rate of decline also picked up marginally compared to May. The rates of decline of both private and public sector job advertising accelerated.

Staff availability improves at strongest rate for three months in July
Overall staff availability improved for the fourteenth month running in July. The rate of improvement was also the fastest for three months, with consultancies generally attributing increased availability to a larger number of redundancies during the month.

Downward pressure on growth of wages and salaries
Weaker growth of demand for staff, combined with a stronger increase in staff availability, both eased upward pressure on pay rates. As a result, growth of permanent salaries was only very modest and the weakest since March. Growth of temporary staff pay rates also eased.

Commenting on the findings, Brett Walsh, Head of UK Human Capital at Deloitte & Touche blaimed concerns over the strength of the recovery from last year’s downturn, plus worries about the possible impact of recent equity market falls on business and consumer confidence for the decline in recruitment confidence.

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