Rec - Report on Jobs - Recruitment activity falls sharply as COVID-19 pandemic hits the UK
Tuesday, 14 April 2020
- Permanent placements and temp billings fall at quickest rates since global financial crisis
- Renewed drop in staff vacancies
- Candidate availability falls at slowest rate since June 2013
The outbreak of Coronavirus Disease 2019 (COVID-19) had a detrimental impact on staff recruitment across the UK in March. The latest KPMG and REC, UK Report on Jobs survey signalled that permanent placements and temp billings both fell at the steepest rates since 2009 as firms cancelled or postponed plans to take on new staff.
Great uncertainty over the outlook underpinned the first reduction in overall vacancies for over a decade. Weaker demand for staff also led to a softening of pay pressures, with both permanent and temporary pay rising at slower rates.
The availability of staff continued to decline, but at the weakest rate since mid-2013 amid reports of increased redundancies.
The report is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
Quickest drop in recruitment activity since 2009
Demand for staff falls for first time in over a decade
Vacancy trends also deteriorated during March as the pandemic hit firms' appetite for staff. Demand for both permanent and temporary workers fell for the first time since the global financial crisis in 2009. Permanent staff vacancies fell at a quicker pace than temporary job openings, but rates of contraction were mild in both cases.
Candidate supply contracts only modestly
Recruitment consultancies signalled only a mild drop in candidate availability at the end of the first quarter, as there were some reports of redundancies due to COVID-19. Notably, permanent staff supply fell at the softest pace since June 2013, while temp candidate numbers expanded at the quickest rate since July 2012.
Slower increases in permanent and temp pay
The increasingly uncertain outlook and reduced demand for staff weighed on pay growth during March. Starting salaries rose at the weakest pace since July 2016, while temporary wage inflation eased to its slowest for just over seven years.
Regional and Sector Variations
Latest data signalled divergent trends when it came to public and private sector vacancy splits. Demand for staff fell for both permanent and temporary workers across the private sector, with the quicker rate of reduction seen for permanent staff. Meanwhile, both permanent and short-term vacancies rose again across the public sector.
Permanent staff demand declined across eight of the ten monitored job categories at the end of the first quarter, led by Retail and Hotel & Catering. Nursing/Medical/Care and Engineering were the only sectors to record higher vacancies.
Commenting on the latest survey results, Neil Carberry, Chief Executive of the REC, said:
“The coronavirus pandemic has put the labour market on pause. It does mean massive disruption in the short term, but we need to remember that this has to be done in order to protect businesses and save lives.
James Stewart, Vice Chair at KPMG, said:
“Unsurprisingly, COVID-19 has already impacted the UK jobs market with recruitment activity falling away as uncertainty grips the nation.
“Firms are cancelling or postponing hiring decisions although, as you would expect, the demand for temporary healthcare professionals and manual labour workers saw a significant uptick.