Private sector employment still contracting

2003

The rate of growth in staff placements slowed in December, according to December’s Report on Jobs produced by the Recruitment and Employment Confederation (REC) and Deloitte and Touche. At the same time, the continuing decline in pay rates growth marks a trend that has been evident since August last year.

Despite continuing to rise, the rates of increase of both permanent staff placements and temporary staff billings were found to have eased in December in response to weaker growth of job vacancies at employers. Consultancies generally linked hesitancy at client companies to hire new personnel, to the uncertain economic outlook for 2003.

Demand was reported to have been particularly weak for staff at the upper end of the labour market. Meanwhile, increased redundancies in the private sector added to the pool of available workers which, in turn, resulted in further subdued growth of pay rates.

Demand for staff, across the board, continued to weaken while the public sector continued to sustain the overall growth in jobs in the UK. This has hidden the fact that the private sector is continuing to contract. As a result, says Gareth Osborne, chief executive of the REC, the outlook for 2003 is uncertain:

"Although there was a slight growth in demand for temporary staff, it was not as high as expected for December. Meanwhile, whilst there was a rise in the availability of people looking for work, pockets of skill shortages remain. Looking forward to 2003 it will be interesting to see what impact the National Insurance (NI) increase has on jobs.”

Brett Walsh, Head of UK Human Capital at Deloitte & Touche, echoed these sentiments. "The latest Report on Jobs continues to highlight the relative weakness of demand for staff, particularly at the upper end of the labour market, which is not apparent from the official claimant count figures.

"Furthermore, rising UK employment continues to reflect increased public sector jobs, disguising the fact that private sector employment is still contracting."

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