REC - Report of Jobs - Downturn in recruitment activity eases in June

Key findings:

• Softer, but still steep, falls in permanent placements and temporary billings
• Quickest rise in staff supply since start of 2009
• Starting pay continues to fall as vacancies decline further

Data collected 12-24 June.

Summary

The latest KPMG and REC, UK Report on Jobs survey indicated a further drop in hiring activity during June as clients continued to freeze or cut back on their recruitment plans due to the COVID-19 pandemic. That said, both permanent placements and temp billings fell at notably softer rates than in April and May. Demand for staff also fell at a weaker, albeit still marked, rate. 

However, redundancies and furloughed workers led to the steepest increase in labour supply since January 2009, with temp candidate numbers rising at a record pace. This, combined with subdued demand for staff, added further downward pressure on pay. 

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

Softer fall in overall recruitment activity

Recruitment consultancies signalled a softer decline in hiring activity at the end of the second quarter. Permanent staff placements and temporary billings both fell at notably weaker rates than in April and May when the COVID-19 pandemic was at its most severe. That said, rates of contraction remained sharp amid reports that clients continued to either pause or cancel recruitment plans.

Steepest rise in staff supply since global financial crisis

The availability of workers rose at the quickest rate since January 2009 in June. There were widespread reports of staff supply increasing due to redundancies and workers who were on furlough and seeking new roles. Substantial increases were signalled for both permanent and temporary staff numbers, with the latter rising at the quickest rate in the survey's 23-year history.

Downward pressure on pay 

Starting pay for both permanent and short-term staff fell further in June as demand for workers remained weak and labour supply continued to increase. Though not as severe as in May, rates of reduction remained sharp for both starting salaries and temp wages. 

Vacancies decline at weaker, but still sharp, rate 

Demand for staff remained historically weak during June, despite the decline in overall vacancies easing further from April's record pace.  While permanent staff vacancies continued to contract at a faster pace than seen for temporary roles, rates of decline were substantial in both cases.

Regional and Sector Variations

On a regional basis, permanent staff appointments fell markedly across each of the four monitored English regions. The steepest reduction was seen in London, while the softest was in the Midlands.

The steepest decline in temp billings was seen in London, while the Midlands saw the slowest reduction. Nonetheless, rates of decrease remained sharp across all four monitored English regions.

June data showed softer, but still sharp, decreases in demand for staff in both the private and public sectors. Permanent vacancies continued to decline at a steeper rate in the private sector compared to the public sector. In contrast, demand for short-term workers deteriorated at a quicker pace in the public sector. 

Demand for permanent staff fell across each of the ten monitored job categories during June. Nursing/Medical/Care noted the softest rate of decline. Meanwhile, the steepest drops in vacancies were seen in Hotel & Catering and Retail. 

Blue Collar was the only monitored category to register higher demand for temporary staff in June, though the rate of vacancy growth was only modest. The steepest reduction in demand for short-term workers was meanwhile seen in Hotel & Catering.

Comments

Neil Carberry, Chief Executive of the REC, said: 

“While there are signs that the worst declines are behind us, today’s figures show that it will be a while yet before we see job placements growing month on month. That’s no surprise, as businesses are focusing on bringing furloughed staff back to work, or making redundancies where they cannot be avoided. Recruiters will be key to helping those who lose their roles find new work – there are always vacancies out there for jobseekers, though they are at a lower level than normal right now. 

“This is now a jobs crisis. Rishi Sunak should use today’s Summer Statement to boost job creation, with a cut in National Insurance designed to retain jobs and boost hiring.  Action on skills will also be vital to getting people into growing sectors – including a more flexible approach to levy-funded training.”

James Stewart, Vice Chair at KPMG, said: 

“Despite an inevitable further drop in hiring activity for permanent and temporary staff, it is encouraging to see they both fell at softer rates than seen in April and May. 

“However, the air of uncertainty around the COVID-19 pandemic will linger – and rebuilding confidence in the UK jobs market will take time.

“All eyes will be on the Chancellor’s fiscal statement today, with job seekers hoping to see a focus on skills and retraining. While UK business will welcome further support packages so they can start to ramp up as lockdown eases, and recovery gets underway.”