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KPMG and REC, UK report on jobs

National lockdown weighs on recruitment decisions in February

National lockdown weighs on recruitment decisions in February

Key findings

  • Permanent placements decline again, while temp billings expand only modestly
  • Upturn in candidate availability slows sharply
  • Demand for staff broadly stable after drop in January

Data collected February 11-22

Summary

The ongoing national lockdown continued to weigh on hiring decisions in February, according to the latest KPMG and REC, UK Report on Jobs survey. Permanent staff appointments fell for the second month running, albeit at a softer pace than in January, while growth in temp billings eased to a seven-month low.

At the same time, overall demand for staff was little-changed in February, having fallen solidly at the start of the year. The availability of workers meanwhile rose only fractionally, as even though pandemic-related redundancies were widely reported, there was also greater reluctance among candidates to seek new roles due to lingering uncertainty and concerns over job security. On the pay front, starting salaries fell modestly, while temp wages were broadly stable.  

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

Permanent placements fall again, albeit at softer rate

The ongoing national lockdown to curb the spread of the coronavirus disease 2019 (COVID-19) led to a second successive monthly drop in permanent staff appointments in February, though the pace of decline weakened since January. At the same time, the expansion in temp billings was the softest seen in the current seven-month sequence of growth. 

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Demand for staff broadly stabilises in February

After falling solidly at the start of 2021, overall vacancies were broadly unchanged in February. Underlying data showed that permanent vacancies were close to stabilisation, while demand for temporary workers increased solidly.

Weakest increase in candidate numbers since the onset of the pandemic

February data revealed only a fractional rise in staff supply, with the upturn the weakest seen since the current period of expansion began last April. While permanent worker availability was little-changed on the month, temp candidate numbers increased at a softer, but still marked, pace. Recruiters mentioned that the latest lockdown and concerns over job security had dampened candidate availability.

Starting pay falls again for permanent workers

Permanent starting salaries fell again in February, though the rate of reduction was only modest. At the same time, temp wages were broadly stable following a slight drop in January. Recruiters often mentioned that pay trends were relatively muted due to sluggish market conditions.    

Regional and Sector Variations

Permanent placements declined across all four monitored English regions bar the North of England. The South of England registered the sharpest rate of reduction overall, closely followed by London.

On a regional basis, the steepest increase in temp billings was seen in the Midlands. London meanwhile recorded a further decline, and one that was the quickest since mid-2020.

Permanent vacancy trends diverged in February. In the public sector, demand for permanent staff fell sharply, while vacancies rose modestly across the private sector. Open roles for short-term workers meanwhile rose strongly across both the private and public sector midway through the first quarter.

Demand for permanent staff rose across four of the ten monitored job categories in February. Nursing/Medical/Care saw by far the steepest increase, followed by IT & Computing. Hotel & Catering saw the sharpest drop in permanent vacancies.

Nursing/Medical/Care also topped the rankings in terms of temp vacancy growth in February, while Blue Collar placed second. Demand for temporary workers meanwhile fell markedly across the Hotel & Catering and Retail sectors.

Comments

Commenting on the latest survey results, James Stewart, Vice Chair at KPMG, said:

“Business confidence remained subdued in February, with a further drop in permanent appointments and the lingering pandemic uncertainty still evident.

“The jobs market remains on hold with hiring decisions stalled, people reluctant to seek new roles and the growth in temporary billings has also slowed. However, it’s encouraging that it’s not seeing the big drop in vacancies or hiring that were seen in the first national lockdown.

“There’s a long way to go to rebuild confidence in the UK jobs market. But with the Covid roadmap to recovery in place and the Chancellor’s Budget announcement to further support businesses and individuals, there is reason for optimism for the UK’s future workforce.”

Neil Carberry, Chief Executive of the REC, said:

“Given the national lockdown that has been in place for the past two months, the labour market has coped remarkably well. Permanent placements have only fallen modestly, while vacancies and candidate availability have stabilised. Meanwhile, businesses have continued to use temporary work to help them through this tough period. We are well-positioned for a recovery as restrictions are lifted – but both businesses and workers will need help to do so.

“With that in mind, there was some good news in this week’s Budget. It was sensible to extend support measures like the furlough scheme and business tax deferrals while health restrictions are still in place, and expand support for the self-employed. But more could have been done to tackle the big economic transitions we face, encouraging growth and reducing unemployment. For example, cutting employers’ National Insurance to encourage job retention and creation, replacing the failed apprenticeship levy with a flexible levy that meets the economy’s needs, and investing in job finding services with recruiters at their heart.”

-Ends-

Contact

KPMG

Gill Carson 

+44 (0) 7768 635843

gill.carson@kpmg.co.uk

REC

Josh Prentice
Comms & Research Officer
T: +44 (0)20 7009 2129

josh.prentice@rec.uk.com

REC

Ciaran Price

PR Manager

+44 (0)20 7009 2192

ciaran.price@rec.uk.com

IHS Markit

Annabel Fiddes

Associate Director

+44 1491 461 010

annabel.fiddes@ihsmarkit.com

Methodology

The KPMG and REC, UK Report on Jobs is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.  

Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

For further information on the survey methodology, please contact economics@ihsmarkit.com.

Full reports and historical data from the KPMG and REC, UK Report on Jobs are available by subscription. Please contact economics@ihsmarkit.com.

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 21 offices across the UK with approximately 16,000 partners and staff.  The UK firm recorded a revenue of £2.3 billion in the year ended 30 September 2020.

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 147 countries and territories and has more than 219,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

About REC

The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for their candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy. Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.

About IHS Markit

IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.

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