Credit squeeze threatens jobs market

Nov 07 2007 by Brian Amble Print This Article

The global credit crunch is already beginning to casts its shadow over the job market, with new figures from the UK showing the number of people placed in permanent jobs growing at its slowest rate for more than a year.

The Report on Jobs, published by the Recruitment and Employment Confederation (REC) and consultants KPMG, provides a strong hint that the fallout from the financial crisis is already taking its toll on business confidence and putting g a dampener on the jobs market.

The survey, which draws on data provided by a panel of 400 UK recruitment consultancies and employers, found that although the number of people placed in permanent jobs continued to rise in October, the rate of growth eased to a thirteen-month low.

Growth in demand for staff also eased and despite small increases in permanent and temporary job vacancies in October, the rate of growth in the former hit a seventeen-month low.

In contrast, billings for temporary and contract staff increased at the fastest pace for three months, a sure sign that employers are trying to avoid taking n permanent employees.

Alan Nolan, Director at KPMG said: "If this trend continues we may see job losses across the sectors which are particularly volatile."

"Where job losses are required it is paramount for employers to plan their termination payment programmes effectively to avoid tax and legal pitfalls," he added.

"Employers should also take the opportunities now to look at how they can reduce their employment costs to minimise the number of job losses and impact of the credit crunch."

Investment banking is one sector where job losses look inevitable, with the Centre for Economic and Business Research predicting that the City of London will see at least 6,000 jobs go as banks tighten their belts.

Meanwhile, the UK government's own figures predict that the number of people claiming unemployment benefit will rise by 11 percent to 930,000 over the next year.

But despite this, the REC argues that skill shortages are still very much a reality for many employers and that the UK must continue to welcome migrant workers from overseas.

"There has been much discussion recently on the rising number of migrant workers coming to the UK but this has largely focused on the negatives, "said Helen Reynolds, the REC's Acting Chief Executive.

"If the current skills shortage is to be met, it is vital - at least in the short term - that we continue to source overseas workers from the EU and beyond.

"Immigration is an essential component of the modern jobs market but concern over its current management has undermined the positive contribution that migrant workers make to the economy.

"With the Report on Jobs highlighting skills shortages month on month, it is essential that the positive impact of immigration is recognised and that any measures to restrict immigration do not adversely affect the businesses that are using this vital source of labour to grow and expand."