Hiring activity plunges to 22-year low

A new report from KPMG and the Recruitment and Employment Confederation highlights the extent of the drop in recruitment activity in April.

Recruitment Services


Analysis of data by KPMG and the Recruitment and Employment Confederation (REC) has found that hiring activity in the UK fell at the sharpest rate in 22 years last month as a result of the coronavirus pandemic as the Bank of England predicts a 14 per cent hit to the economy and long-term unemployment issues.

The report, compiled by IHS Markit and based on responses from 400 UK recruitment and employment consultancies, says both permanent placements and temp billings fell at rates far exceeding those seen even at the height of the global financial crisis.

The pandemic also led clients to reassess their staffing needs. Vacancies for both permanent and temporary workers fell at the sharpest rates ever seen since the survey began in October 1997.

In addition, starting salaries and temp wages both fell during April. Permanent starting salaries declined at the quickest rate since March 2009, while pay awarded to short-term staff dropped to the greatest extent since July 2009.

The availability of candidates rose for the first time since April 2013, with the rate of expansion the steepest since November 2009.

Permanent staff appointments fell at record rates across all four monitored English regions in April, led by the North of England. And all four English regions registered the most severe drops in temp billings since data collection began in October 1997.

The most severe falls in demand for staff were seen for permanent and temporary workers in the private sector, but the public sector also saw record declines in vacancies for both permanent and short-term staff.

Substantial falls in demand for permanent workers were seen across all monitored job categories except for Nursing/Medical/Care in April. Secretarial/Clerical and Hotels & Catering recorded the most severe declines.

Neil Carberry, Chief Executive of the REC, said recovery would be gradual and called for the government to taper off its support as a result. The Chancellor has held talks with nine of Britain’s union leaders to assure them there will be no “cliff-edge” to the government’s furlough scheme and that any easing will be gradual and minimise the impact on unemployment.

The Bank of England is predicting a 14 per cent hit to GDP in 2020, equivalent to around £300 billion, or £9,000 for every family in Britain. Its scenario also implies the UK economy will return towards its pre-pandemic growth path in 2021, although it projects unemployment to remain above its pre-pandemic path until at least 2023 – after reaching a 25-year high of nine per cent this year.

The Resolution Foundation says “this shows that even if the economy recovers rapidly, Britain will be living with high unemployment for some time, and that policy makers will need to take a more active approach towards supporting people back in to work”.

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