Demand For Staff Decreases, Apparently

Whilst the news today is all about the Oscars and THAT photo of the Princess of Wales, the Recruitment and Employment Confederation and KPMG have published their monthly report on jobs.

They report that there has been a sharp decline in the pace of wage growth, and falling demand for staff in the economy (but not, as they are presumably unaware, in the insolvency industry). This in turn will apparently put additional pressure on the Bank of England to cut interest rates in order to stimulate the jobs market before it stalls further.

The rate of growth in starting salaries apparently slipped to the lowest rate in nearly three years, down to an index rate of 55.2 in February, from 55.8 in January. It remains above the 50-point threshold which would mean the market was contracting, however. Starting pay rose, but at a slow rate.

The Bank of England has repeatedly said that it needs to see salary increases being contained before it will begin to lower interest rates from their 16-year-high of 5.25%.

The survey also reported that businesses’ demand for workers deteriorated over the last month, largely due to concerns about the state of the UK economy. The total vacancy index, which measures demand for permanent and temporary staff, fell well below the 50-point mark, from 49.4 to 46.9. Permanent hiring fell to 43.6, and the temporary index to 46.

Neil Carberry, chief executive of the REC, said: “This month’s survey shows the market slowing, and a concerning increase in the decline in temporary billings, to the lowest performance since the middle of 2020. Given recent news about GDP dropping, this overall picture is no surprise — but it is certainly still quite resilient by comparison with previous recessions.”

As we have reported previously, it is thought that we are already out of that recession due to an increase in consumer spending.

Unemployment has remained historically low at 3.8%, which economists consider is due to businesses hoarding workers to avoid lengthy and costly recruitment processes.

It is thought that labour force participation is likely to be permanently lower in the coming years, partly due to the pandemic shrinking the pool of available workers. The OBR considers that the Chancellor’s decision to reduce National Insurance by 2% would convince 193,000 people to return to the workforce; one third of the number of people who have left the labour market since Covid came coughing and spluttering onto the scene.