Permanent placements on the rise as the market gains confidence.
As indicated by the latest REC report, the decline seen across the industry towards the end of 2019 appears to have ended. An uplift in January’s data showed the strongest rise in permanent placements for over a year.
The findings from the REC's February Report on Jobs indicate the uncertainties that were prevalent in 2019 around Brexit may now have begun to settle down after the UK’s actual departure from the EU, leaving a sense of relief and resulting in an overall rise in confidence throughout the market.
The key findings from February’s report indicate:
• Permanent appointments are rising modestly
• Permanent vacancies are rising at the fastest rate in ten months with a 4.2% increase since March 2019
• Contract & Temporary billings have declined for the first time since April 2013
Chief Executive of the Recruitment & Employment Federation (REC), Neil Carberry said, “It’s good to see that businesses have grown in confidence over the past two months and taken the opportunity to restart hiring. Permanent placements are up again, and demand for staff has risen at the quickest rate for ten months. This is good news for employers, recruiters, and candidates – all three can now get on with making the economy flourish in 2020.”
Carberry adds, “But the upcoming IR35 reforms are having a negative impact on the availability and placement of temporary workers. It is vital that people pay the right amount of tax and that the system is fair, but for both of those things to happen, we think the government needs to pause and think again on how IR35 changes. The temporary labour market is being stifled, and that’s not good for employers or our economy.”
Permanent vacancies on the rise
The number of permanent vacancies is on the rise with the Accounting and Finance sector seeing the quickest expansion closely followed by IT/Computing and Engineering. However, within the contract and temporary markets, the highest demand was experienced in the Engineering jobs sector although IT/Computing showed a decline in demand.
The contractor market is currently experiencing change and uncertainty whilst private sector companies grapple with IR35 reforms. The number of UK IT tech freelancers fell in 2018 following the introduction of public sector off-payroll working reforms. According to the Office for National Statistics (ONS) data, there was a 2.4 per cent fall in IT contractors to 121,989 in 2018 compared with the previous year. Following the impact of IR35 reforms in the public sector, many IT contractors moved into permanent roles or umbrella companies.
In April 2017, the UK government reformed the rules in the public sector, shifting the responsibility for determining employment status from workers to the public authorities. From April 2020, the same rules will apply to the private sector.
Staff availability
The overall supply of candidates has now fallen continuously since May 2013 and all the data for permanent and contract staff indicated further falls in January.
Shortages are common in engineering disciplines such as Electronic Engineer jobs, Systems Engineering, Electrical Engineering, Mechanical Design Engineer jobs, Software Engineers, C# Developers, Data Scientists, and other roles such as Buyers.
Immigration Policy’s effect
Throughout 2019 survey results showed a slight but steady monthly decline in permanent placements being made as the wariness about leaving the EU grew across businesses. However, according to the REC’s Jobs Outlook Survey, the overall hiring intentions of businesses were positive as they planned to hire both long and short-term permanent and contract roles. Now businesses have a clearer idea of Government intentions business confidence in hiring has returned.
However, intention is one thing and being able to access the right candidates is another. The recent report from the Migration Advisory Committee (MAC) on points-based immigration may provide some future solutions.
Speaking on the skills shortage and post-Brexit fall-out, Adam Walker, Redline Group Director comments:
"Following the UK exit of the EU, there are promising signs for the high-tech jobs market. Challenges still exist around the introduction and rules for off-payroll working (IR35) in the private sector and talent shortages. The shortage of engineering and high-tech talent will lead to a loss of economic output, the UK needs to rapidly develop a domestic talent pool as well as welcoming student, research and qualified professionals from abroad to ensure the future STEM workforce. Companies are investing in training, learning and development courses and building on knowledge transfer programs to avoid the skills gap whilst increasing exposure to robotics, automation, and computer programming in order to build the fundamental digital skills and abilities needed to succeed in STEM. The proposed immigration system may also assist in reducing the skill shortages being encountered by many high-tech businesses."
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