Small rise in demand for staff but no signs of real recovery

Nov 07 2002 by Brian Amble Print This Article

The latest monthly Report on Jobs from the Recruitment and Employment Confederation (REC) and Deloitte and Touche shows a small rise in the number of permanent and temporary placements in October. But it is too early to conclude that economic confidence is also rising.

Recruitment consultancies reported an expansion of demand for staff for the first time since July. However, the pool of available staff continued to rise sharply, helping to moderate pay growth. Permanent staff salaries were again largely unchanged whilst growth of temporary staff pay rates eased.

Behind the figures, however, lies a continuing fall in demand from private sector employers. The apparent rise in demand for staff has been driven largely by public sector demand.

On a scale where all above 50 denotes growth, the 52.5 figure for permanent placements and the 53.3 figure for temp billings come after a four-month two-point decline in the index.

The survey is one of the most comprehensive guides to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers, as well as data on national newspaper recruitment advertising.

Brett Walsh, Head of UK human capital for Deloitte and Touche, said that the figures were the impact of an increased demand from the public healthcare sector and should not be seen as a rise in confidence:

”Although an upturn in demand for staff was recorded in October, much of the increase was, in fact, driven by increased public sector demand for permanent placements. Private sector demand, on the other hand, continued to fall.

”Employers clearly remain cautious with regard to recruiting and many firms continue to reduce headcounts to cut costs in the uncertain economic environment,’ he said.

Pay rates for temporary staff remained basically unchanged last month as availability of temps dropped by around 2.5 points on the index to 58.7. As more permanent staff became available, however, pay rates also increased, albeit by 0.6 taking it back into growth at 50.4.

Tim Nicholson, chief executive of the REC warned today that although the growth in placements was welcomed, there were changes to the labour market that could force a different result:

”Since early this year there has been a modest but welcome growth in permanent placements and temporary billings…However, the labour market remains fragile, with regulatory pressures and an increase in employers’ NIC to come.”