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Recruitment showing glimmer of recovery in July

The downturn in recruitment activity eased considerably during July, according to the latest KPMG and REC, UK Report on Jobs survey.

Permanent staff appointments and temporary billings both fell at the softest rates for five months as more parts of the economy reopened, but vacancies continued to decline as
the coronavirus pandemic weighed heavily on hiring decisions.

Widespread reports of redundancies drove a substantial increase in the availability of workers – the supply of temporary workers rose at the fastest rate in over two decades of data collection, while the upturn in permanent labour supply was the second sharpest on record. 

The report is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

Increase in June job postings 

The survey’s launch coincides with separate research from Firefish Software which showed a 14% increase in job postings in June compared to May, the first month to see growth in 2020.

The recruitment software company has pointed to the statistic as a positive indication that businesses could begin hiring again over the coming months, and we should expect to see more jobs on the market, if lockdown restrictions continue to ease.

However, although the number of jobs have started to increase, the number of new positions posted each month is still less than half of the pre-Covid-19 numbers, Firefish commented in its report.

Downward pressure on pay

The KPMG and REC, UK Report on Jobs survey pointed to the combination of rising staff supply and subdued demand for workers adding further downward pressure on starting pay in July. Starting salaries and temp pay both fell markedly in the latest survey period, despite rates of decline easing since June.

All four monitored English regions recorded softer falls in permanent placements during July. The weakest decline was in the Midlands, while the fastest was in London.

On a regional basis, temp billings declined markedly in the South of England and London. Meanwhile, mild increases were reported in the Midlands and the North of England.

Private and public sector vacancies

Vacancies declined at slower rates in both the private and public sectors in July. The public sector recorded steeper falls in permanent and temporary vacancies than in the private sector, but rates of contraction remained sharp across the board. Overall, the quickest drop in demand was signalled for permanent public sector workers.

Permanent staff vacancies declined across each of the ten monitored job categories in July. Unsurprisingly, the steepest reductions were seen in the retail, hotel and catering sectors. The weakest drop in demand was for engineering roles.

The only sectors to register higher temporary vacancies in July were blue collar and construction.  

Softest decline for five months

Commenting on the results, James Stewart, vice chair at KPMG, said: “With the softest rates of decline seen for five months, it’s encouraging to see the downturn in recruitment easing as parts of the economy reopen.

“However, we are still a long way from being out of the woods, with hiring plans remaining on ice and the uncertain outlook still weighing heavily on business’ recruitment decisions.

“As the furlough scheme unwinds, unemployment is likely to rise further, proving both an opportunity and challenge for government to create training and skills programmes for jobseekers – and help bring confidence back to the UK workforce.”

Recruiters key to building confidence

Neil Carberry, chief executive of the REC, said: “While permanent placements and temp billings still decreased last month across most areas of the country, the pace of decline has slowed hugely as the tide turned on lockdown. With the economy opening up through June and July, we would expect an improving trend in the coming months as firms recover from the worst of the crisis. The fact that demand is now increasing for temporary blue collar and construction workers is also a good sign.

“There are far fewer vacancies in the market than before March, and more people looking for jobs. Recruiters will be key to helping people build confidence and find work – but the reality is that government needs to help kickstart hiring. Reducing employers’ National Insurance rates would cut the cost of hiring, and a good Brexit trade deal will also support stronger business confidence and investment.”

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