Permanent placements fell at sharpest rate for eighty-one months in August

Augustís Report on Jobs, from the Recruitment and Employment Confederation and KPMG, signalled further weakening of the UK job market. Permanent placements fell at the sharpest rate since November 2001, while temp billings declined at a survey-record pace. Declining demand for staff and strongly rising candidate availability dampened pay pressures, with salary growth the weakest for over five years.

The Report on Jobs, published today by the Recruitment & Employment Confederation and KPMG, provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies.

Kevin Green, Chief Executive of the Recruitment and Employment Confederation (REC), comments:

ìThe deteriorating economy is now having the expected negative impact on the labour market. The demand for both permanent and temporary workers is weakening, although it must be remembered that this follows a period of unprecedented high demand for staff. A positive benefit for the economy is the muted pay growth that the increase in the supply of candidates is creating. Even in these uncertain times, recruitment consultancies are still seeing continued demand for flexible staffing to meet businesses fluctuating people requirements.î

Alan Nolan, Director at KPMG comments:

ìThe slide in the UK economy continues to hit the jobs market hard – with yet another sharp drop in recruitment. ìUK employers are continuing to control payroll costs through redundancies - and by refusing to take advantage of a growing (but increasingly unused) pool of skilled labour. These workers are starting to drift abroad in search of employment – and there is a risk that (when the market turns) the UK will be left behind by a skills shortage.

ìEmployers have to meet their fiscal obligations to HM Revenue and Customs in full and on time with stringent penalties and interest for non-compliance. It may now be time for Government to consider kick-starting the jobs market by relaxing this legislation - enabling the possibility of tax payment deferrals or ëholidaysí.î

- Marked decline in staff appointments...

Latest data from the survey of recruitment consultancies signalled a substantial drop in the number of people placed in permanent placements during August, with the rate of decline accelerating to the sharpest since November 2001. Agenciesí temp billings also fell, and at a survey-record pace.

- ...as vacancies contracted further

Lower placements and billings reflected declining demand for staff. Permanent vacancies fell at the fastest pace for eighty months, while temp vacancies fell for only the second time in the series history.

- Muted pay growth...

Recruitment consultants reported very modest rises in permanent and temporary staff pay in August, citing weak demand for staff and an improved supply of available candidates.

- ...reflected strongly rising candidate availability

Amid reports of recent redundancies and a lack of suitable jobs, the availability of staff to fill vacancies increased substantially in August. The supply of both permanent and temporary candidates increased at sharp and accelerated rates.

Full historical data from the Report on Jobs can be obtained from Jack Kennedy at Markit Economics on (tel: 01491 418687 or email jack.kennedy@markit.com)