The growing impact of skills shortages on London’s labour market were evident in August, with the availability of permanent staff recorded at its lowest level in 14 months, according to Bank of Scotland’s London Labour Market Report.
Latest survey data signalled a rise in permanent staff placements in August in the Capital, however the increase was smaller than those seen earlier in 2005 reflecting easing demand for staff and shortages of suitable candidates.
Average salaries for permanent staff rose, extending the current period of pay inflation to two years, however the rate of increase eased to a 19-month low, mirroring the slowing trend in demand growth for permanent employees.
The report’s unique ’Barometer’ signalled an improvement in London labour market conditions for the twenty-fifth consecutive month in August. However, the rate of improvement eased to the slowest rate in almost two years. Three of the four components of the Barometer made weaker (albeit still positive) contributions in August - staff appointments, demand for staff and employee pay. Only availability for work made a stronger positive contribution for the month.
Commenting, Tim Crawford, Group Economist at Bank of Scotland, said: The London jobs market, although still growing, has cooled with staff appointments rising more slowly than a year ago. On the positive side employment growth is a little stronger in the Capital than the UK average, most likely reflecting the strength of the service sector in London.
The recent slowdown has been reflected in more modest demand from employers but recruitment firms now report that lower staff availability is also a key factor. Pay rates continues to rise, albeit modestly, but the risk is that they could rise at a faster pace if firms continue to face difficulties recruiting new staff.
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Slow demand for staff and widening skills shortages cools London jobs market
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