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Cautious hiring favours contractors and temp workers
by Susie Hughes at 11:43 11/05/23 (News on Business)
Ongoing uncertainty around the economic outlook and more cautious hiring policies resulted in an upward trend for employers to turn to the temporary worker and contractor market.
The latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global, showed that a preference for short-term staff pushed up temp billings growth to a seven-month high, while permanent staff appointments contracted at the fastest pace in over two years.

Vacancy trends showed a softer rise in permanent staff demand contrasting with a sharper increase in temp positions.

UK recruitment consultancies signalled a further shift in hiring preferences from permanent to temporary workers amid lingering economic uncertainty around the outlook and rising costs in April.

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Notably, permanent placements fell for the seventh month in a row, and at the quickest rate since the start of 2021. In contrast, temp billings expanded solidly, with the rate of growth the fastest for seven months.

Starting salaries for permanent workers continued to rise at a historically sharp pace in April, with the rate of inflation picking up to a four-month high. At the same time, temp wage growth improved to the highest since January. Higher rates of starting pay were frequently attributed to efforts to attract and secure suitably-skilled staff and bumps to pay to reflect the higher cost of living.

'Hedging their bets'
Neil Carberry, REC Chief Executive, said: “This data shows how uncertain many employers are feeling right now. The good news is they still need to hire, as growing vacancies show. But firms are hedging their bets. After a better month in March, in April we saw permanent hiring fall back quickly and businesses turn to temps to help them through. London had a particularly difficult month.

“The picture varies for temporary recruitment too, with REC members reporting weaker demand in some sectors than others as sectors like logistics, driving and food are heavily affected by changing consumer behaviour. Taken together, however, there is still plenty of opportunity out there for jobseekers. Wages are rising strongly for both temps and new permanent hires in the face of inflation, even though candidate availability is finally starting to improve.

“For employers, hiring is unlikely to get easier soon. Those businesses that succeed will have good, long-term strategies for accessing talent from a wide range of sources, including retraining.”

Cautious

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Claire Warnes, Partner at KPMG UK, said: “The preference for hiring short-term staff continued unabated into April. Businesses remain cautious about committing to permanent hires in the face of ongoing economic uncertainty, which led to the quickest increase in temporary billings for seven months.

“Recruitment freezes and candidates lacking the right skills were also cited as causing this divergence, with permanent staff appointments contracting at the fastest rate in two years.

“For businesses looking to hire there are some green shoots in candidate availability, as supply improved for the second month in a row. Starting rates of pay for both permanent and temporary positions are still rising at historically sharp rates, giving people an incentive to move roles.

“But skills shortages still dominate the market with no signs of progress. Government and businesses must do more to avert this skills crisis.”

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Susie Hughes © Shout99 2023

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