Employers are cutting back on permanent hiring and are turning to temporary staff because of uncertainty about the economic outlook, according to a report.
Demand for permanent employees fell last month as England was put into a second lockdown, forcing businesses to adjust their staffing levels and fuelling uncertainty about the future, the latest survey by KPMG and the Recruitment and Employment Confederation found.
Businesses decided to meet their needs with short-term workers. The temporary billings index measured 56.1 last month, down slightly from 56.4, while the permanent placements index fell from 48.8 to 48.2. A reading above 50 indicates that companies are expanding their workforces.
Large parts of the economy were affected by the lockdown. Only two of the ten monitored sectors registered higher demand for permanent workers in November — IT and computing and engineering. Hotel and catering and retail suffered the sharpest falls in demand for permanent staff.
“Panel members frequently mentioned that staff hiring was dampened by uncertainty related to the coronavirus disease, as well as the renewed lockdown measures in November. Concurrently, overall demand for staff fell solidly, driven by a marked fall in permanent job vacancies,” the report said.
Vacancies are shrinking and redundancies are rising, which has increased the pool of available workers and has put pressure on pay for permanent and temporary workers. The permanent salaries index was 45.6, while the wages index registered 48.6.
Although the report paints a poor picture of business confidence, the confederation said that the rolling out of a coronavirus vaccine had given companies more confidence about the future. It said that hiring activity was being deferred until after restrictions were lifted.
Neil Carberry, 43, its chief executive, said: “Feedback from REC members indicates that employers are still looking to hire, with a lot of demand for permanent staff displaced to January as firms hope the Covid crisis is easing. For now, temporary work continues to help businesses to operate and people to find jobs — some positive news as we head towards Christmas.”