Solid Rebound In Permanent Placements During February

The latest KPMG and REC, UK Report on Jobs: North of England survey pointed to a solid rebound in permanent placements during February, while temporary billings growth eased for the second month running. At the same time, demand for both permanent and temporary staff rose in February, albeit with the former rising only fractionally. On the pay front, permanent starters’ salaries continued to fall, despite the first reduction in labour supply for just over a year. For temporary workers, wage rates increased for the third month running amid the softest rise in availability since February 2020.

The report, which is compiled by IHS Markit, is based on responses to questionnaires sent to around 100 recruitment and employment consultancies in the North of England.


Solid rebound in permanent placements

Following a sharp decline in January, there was a fresh increase in permanent staff appointments across the North of England in February. Moreover, the rate of growth was the quickest for five months and solid overall. Some recruiters noted stronger demand for workers from their clients. At the national level, permanent staff appointments fell for the second month in a row, although the rate of decline eased notably since January. Across the four monitored regions, the South of England recorded the quickest fall, followed by London. The North of England was the only monitored area to register an increase in permanent placements during February.

Recruiters in the North of England recorded a further rise in temporary billings during February, extending the current run of growth to eight months. Anecdotal evidence indicated that the expansion was supported by strengthening demand for workers. That said, the rate of increase eased for the second month running to a marginal pace that was the softest since last July. Across the UK as a whole, temp billings also increased again, but the upturn was the slowest in the current seven-month sequence of expansion and only mild. Across the four monitored English regions, the Midlands posted the steepest rise, while London recorded the only decrease.

Demand for both permanent and temporary staff in the North of England increased in February. The rise in permanent vacancies was only fractional, but represented a tentative recovery in demand following the quickest reduction in vacancies for five months in January. Meanwhile, demand for temporary workers rose for the sixth month running. The rate of growth was little-changed from the previous survey period and marked overall.

First reduction in permanent labour supply since January 2020

February data pointed to a decline in permanent staff availability across the North of England, thereby ending a one-year sequence of expansion. Though modest, the rate of deterioration was the quickest seen across the four monitored English regions. Recruiters often commented that candidates were unwilling to move jobs amid uncertainty surrounding the COVID-19 pandemic. At the national level, permanent labour supply was broadly unchanged. As was the case in the North of England, the Midlands posted a fresh decline in permanent candidates. Meanwhile, London and the South of England saw further rises in availability.

Although temporary labour supply in the North of England continued to expand in February, the pace of growth eased for the fourth month in a row. Notably, the latest increase in availability was the slowest since before the escalation of the COVID-19 pandemic in March 2020. Where higher candidate numbers were recorded, some recruiters cited job losses linked to the virus. A similar trend was recorded at the national level, as temp staff supply across the UK rose further, but the rate of increase was the slowest for nearly a year. At the regional level, the upturn in temp staff supply was broad based, but London registered a markedly faster increase than the three remaining monitored English regions.

Slowest fall in permanent starters' salaries for 11 months

Recruiters in the North of England reported a further decrease in remuneration awarded to permanent new joiners in February. The result extended the current run of decline that began in April 2020. That said, the rate of reduction eased to the softest in this sequence and was modest overall. Starting salaries fell at a similarly mild rate at the national level. Declines were recorded in each of the four monitored English regions, with the South of England seeing the fastest reduction.

Wages earned by temporary workers in the North of England increased for the third month in a row during the latest survey period. However, the rate of pay inflation eased to the softest seen over this period and was modest overall. Across the UK as a whole, temp wages were broadly unchanged during February, as mild increases in the Midlands, North and South of England offset a sharp decline in London.



Neil Carberry, Chief Executive of the REC, added: “Given the national lockdown that has been in place for the past two months, the labour market has coped remarkably well. Permanent placements have risen, while vacancies have broadly 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.”