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This mirrors the slower rise in the permanent staff placement sector. However, demand for permanent staff continued to rise at a faster pace than that signalled for short-term workers, according to the latest report from agency association REC and accountants KPMG.
Demand:The availability of staff for both permanent and temporary/contract roles fell further in December. Although rates of contraction were slower than in November, they remained marked.
Pay: Salaries awarded to staff placed in permanent jobs increased further in December. However, the rate of growth was the slowest in over two years. Temporary/contract staff hourly pay rates increased at the weakest pace in 21 months.
Regional and sector variation: Growth of short-term appointments was strongest in the Midlands during December, while London-based agencies noted the weakest rise.
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REC chief executive Kevin Green, said: "The UK labour market is in great shape at the start of 2016 but some major challenges lie ahead.
“Skill shortages are a real threat to continued growth in many industries. With talent at a premium, employers will try to attract staff by increasing starting salaries. On general wage growth, as many businesses align annual pay rises to the rate of inflation, we anticipate that growth will remain at 1.5 to 2.5 per cent.
“Businesses will need to manage the introduction of the National Living Wage, which will also have a major impact on pay levels. We wait with some trepidation to see the effect it will have on demand for staff, particularly in low-pay sectors such as healthcare.
“The other bump on the road for business is the EU referendum, which is likely to create uncertainty which could lead to a reduction in hiring.”
Business confidence
Bernard Brown, Partner at KPMG, said: "We are beginning to see a shift away from short term, low risk hiring, with demand for permanent staff outpacing that for temporary workers. This indicates businesses’ confidence is steadily solidifying, leading to an increased willingness to make long term investments in their workforce."
However, specific skills remained in high demand, particularly for IT specialists.
Mr Brown said: “In the wake of several high profile breaches, companies are investing heavily in their cyber security teams and demand for IT specialists surged in December. This hiring boom has caused a skills shortage in the sector, with recruiters struggling to find enough candidates qualified in IT security to satisfy demand.
"Faced with such stiff levels of competition businesses need to rethink their recruitment strategy. As well as hiring talent to build up their in house defence capability, they need to upskill the staff they have, or risk losing them to a competitor more willing to make an investment in their careers.”
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Susie Hughes © Shout99 2016
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