Contractor hiring decreases again, but things are “looking up”

While COVID-19 saw contractor hiring and permanent placements in May fall at the second sharpest rate on record, experts believe that the “worst may be behind us.” 

This is the latest news from KPMG and REC’s monthly UK Report on Jobs, which, on the face of it, does not make for pleasant reading. The insight reveals that contractors and permanent staff found work very difficult to come by again last month, as COVID-19 uncertainty saw firms delay or scrap their hiring plans altogether.

As a result, recruitment activity declined at its second-fastest rate in 22-years, while company closures and redundancies led to the quickest increase in candidate availability since July 2009. KPMG’s James Stewart blamed the “lingering uncertainty around the COVID-19 pandemic”, which “continues to take its toll on the UK jobs market.”

The economic challenges created by the virus have also left their mark on rates of pay received by contractors, who found that clients looked to negotiate fees as demand weakened and shrinking budgets were placed under great pressure. 

In May, the sharp drop in contractor hiring was experienced across all industries except healthcare, which remained positive, albeit due to the ongoing pandemic. According to KPMG and REC, the most marked deteriorations were in hospitality and retail, which have been all but shut down since mid-March. 

To a degree, this concerning scenario was to be expected, explained REC’s Chief Executive, Neil Carberry, who said: “Given the impact of the lockdown in early May, it’s no surprise that these figures look bleak.” 

However, Mr Carberry is optimistic that a recovery is in sight, with data supporting this view: “In the two weeks since this data was collected, lockdown rules have been eased and the feedback we get from recruiters every day suggests that the slight improvements that we can see in the placements and vacancies data have continued. I’m also hearing from business leaders all over the country that things are starting to look up. There is a long way to go, but it’s time to talk about how we recover from this crisis.”

Despite hiring organisations’ confidence in the economy remaining at a record low, the report suggests levels of confidence in hiring are starting to look up. This improved by 11%, to -10. Meanwhile, demand for temporary staff also increased marginally between April and May, with companies’ hiring intentions for the next 4-12 months remaining positive throughout this period. The report says this indicates the “worst may be behind us”. This follows on from similar data released last month, which claimed the contractor hiring “decline is flattening.”

Looking ahead to the coming months, REC’s CEO spoke of the important role recruiters will play in helping contractors and permanent staff find work as the UK focuses on its recovery: “Collaboration between Government, businesses and recruiters will be vital as we try to get the economy up and running again. The UK’s staffing and recruitment companies are experts at helping people find work, and we are ready to support jobseekers in the months ahead.”