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Report on Jobs shows decline in salaries hitting new record as demand for staff weakens further

The REC/KPMG monthly Report on Jobs published today highlights a further deterioration in labour market conditions, driven by sharply reduced demand for staff during February.

Labour market conditions continued to deteriorate  as the poor economic climate and reduced company activity levels led to another substantial decline in demand for staff.

Vacancies fell at a pace that marginally exceeded January’s previous record. In line with the trend seen in recent months, only the Nursing/Medical/Care sector bucked the overall trend of sharply falling demand for staff.

Key points include:

•          Permanent placements and temp billings fell at near-record rates.
•          Vacancies contracted at the fastest pace in the survey history.
•          Series record reductions in permanent salaries and temp pay.

  Recruitment consultants reported that permanent and temporary staff appointments continued to decline rapidly in February. In both cases, the rates of contraction accelerated to near survey records.

  The latest data signalled further falls in wages and salaries during February, as weak demand for staff and strong candidate availability served to depress pay rates. In both the permanent and temporary sectors, the latest declines were the steepest in the respective series histories.   

  Redundancies and fewer job opportunities were cited as the principal factors underlying a further marked increase in the supply of candidates to fill job vacancies in February. Strong rates of expansion were signalled for both permanent and temporary staff availability, albeit weaker than the peaks seen in December.

  Kevin Green, Chief Executive of the REC, said:

  “It is clear that we have not yet hit the bottom of the jobs market with demand for staff continuing to contract.  Every job must be seen as an opportunity to keep people in work, including temporary, interim and contract positions.

  "It is essential that we avoid any additional regulation that would simply act as a disincentive for employers to offer these kind of flexible working arrangements to job- seekers at such a crucial time. Although demand for temporary staff is down and despite recent high-profile examples of assignments being terminated, there are still over a million temporary and interim assignments available every week.

  “Feedback from recruiters confirms that a greater proportion of job-seekers are looking for higher-end positions compared to previous downturns. It is crucial that the right support is being provided to these job-seekers which is why the private sector recruitment industry, and the specialist agencies within it, will be working in increasingly close cooperation with Jobcentre Plus.” 

  Mike Stevens, Partner and Head of Business Services at KPMG commented:

  “We struggled to find any glimmer of hope in these figures but failed. The UK jobs market is continuing its downward spiral, with placements falling for the 11th month in succession and vacancies down across most sectors. The latest survey also reveals that salaries for permanent and temporary hires are falling at record rates. In practice, we believe this is partly a result of employers replacing senior people with lower level and lower paid staff.

  “Six months ago we hoped that some level of employment demand would have been maintained by foreign workers returning home and by the impact of early retirements – both a feature of previous recessions. This does not appear to be happening, perhaps because the employment situation is just as bleak elsewhere in Europe and because the impact of the credit crunch means not many can afford to retire early.”

  The Report on Jobs provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies.

  Copies of the report are available on annual subscription from Markit. For subscription details, please contact: economics@markit.com.