UK recruiters say the most difficult conditions in the labor market from Covid

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Recruiters report the most difficult conditions in the British labor market from the COVID-19 pandemic, without signs of employers who regain confidence to hire after Rachel Reeves’ tax collection budget in October.

A monthly survey conducted by KPMG and the Confederation of Recruitment and Employment, published on Monday, says the most generalized weakening of the demand for personnel since August 2020, with the Vacancies Index of the survey of 42.9 in December to 41.6 in January.

Any reading below 50 means that the proportion of recruiters who inform a weakening in the market exceeds that participation informs that the improvement of conditions.

The agencies also placed less people in permanent and temporary jobs last month, and the temporary billing index fell abruptly from 46.3 to 41.5, the lowest since June 2020.

The Executive President of Rec, Neil Carberry, said that this was weaker than the usual post-Christms deceleration in the temples, since many companies maintained investment plans waiting until the economy recovered.

The decision of the Bank of England last week to reduce interest rates by 0.25 percentage points to 4.5 percent would help, as well as the government’s impulse to promote economic growth, Car Carrry said.

But he added: “An autumn of fiscal gloom, difficulty navigating the important tax increases and the upcoming increases and. . . A new expensive approach to labor rights acts as brakes in progress. ”

The KPMG/REC report is the last one in a series of surveys that indicate that employers have become more reluctant to assume the new staff since the Chancellor in October established an increase of £ 25 billion in the contributions of the National Employer Insurance .

Reeves has defended politics, along with an increase in the national decent salary, which must enter into force in April. But business leaders have warned that the increase in costs, reaching weak growth and growing commercial tensions, will lead to staff cuts. ”

The economic discomfort has affected the government of Sir Keir Starmer, and the Vice Prime Minister Angela Rayner said Sunday that “they completely understand the frustration of people.”

“We were chosen with a mandate of change,” he told the BBC. “People want to see it immediately. But turning it will take a little more than seven months.

“Keir has been completely open about wanting to do everything possible for the country. He will not do what he thinks is popular. Wants to deliver. No one is a worse Keir critic than Keir. “

Until now, the deceleration in hiring does not seem to have been matched by a great loss of employment for existing employees, although the image has clouded by the absence of reliable official data in the labor market.

The figures based on tax records suggest that the number of payroll employees has fallen only a little since last summer. Meanwhile, there has been no significant collection in redundancy notifications presented by large employers, according to figures of the end of January.

When announcing the cut in the interest rates last week, the BOE monetary policy committee said he judged that the labor market was in balance, with the widely stable unemployment rate in the last quarters.

This marks a return to normal, following what the BOE called an “exceptionally tight” labor market from the pandemic, where many employers fought to fill the positions. The Central Bank said that despite the clear weakening in GDP growth, companies still had only a little free capacity.

However, tariff settings saw a risk that employers would reduce the most abrupt staff in response to higher taxes, particularly in the sectors where many employees were paid in the minimum wage, which makes it impossible to compensate for the Increase of NICs when squeezing payment.

The KPMG/REC survey showed that recruiters were informing generalized falls in vacancies in all sectors, including low -paying areas, such as the hospitality that until recently had acute shortage of staff.

They also reported much less medical care roles, after repression of the use of agency workers by NHS trusts. However, the most clear falls in vacancies were in more paid professional areas and in the technological sector, which has been suffering a long -term fall.

Recruiters have seen more candidates looking for work, even when work openings are dried, which leads to a decrease in salary pressures.

However, the KPMG/REC survey has indicated a weaker salary growth than other measures for several months, which suggests that employers are no longer willing to pay a large premium to ensure a new hiring, but still face demands from existing personnel to recover the lost land during the cost of the living crisis.