COVID-19 places UK labour market “on pause”
The COVID-19 outbreak saw contractor hiring in March fall at its steepest rate since 2009, with the number of individuals placed in permanent positions also impacted dramatically last month. With firms cancelling or postponing plans to take on new staff – whether in a contract or permanent capacity – recruiters reported a weakened demand for workers, leading to a significant fall in the number of placements recorded.
Contractor hiring falls at fastest rate since 2009
Having risen in the three months prior to March, KPMG and REC’s Report on Jobs signalled the sharpest decline in temporary and permanent placements since February 2009. Recruiters said the combination of COVID-19 and the pending arrival of IR35 reform (which has since been postponed) resulted in the biggest decline in contract billings in over a decade.
Eight of the ten industries monitored experienced a decline in placements, with the steepest reduction in the IT & computing and retail sectors. That said, the growing need for locum doctors and nurses to help fight COVID-19 led to a rise in demand for contractors working in healthcare, with blue-collar workers also sought after.
Demand falls for first time since financial crisis
In addition to an overall drop in placements last month, the number of vacancies also deteriorated. KPMG and REC say the appetite for contract and permanent staff fell for the first time since the global financial crisis in 2009. However, permanent staff vacancies were said to have fallen at a quicker pace than contract opportunities, while the rates of contraction were apparently mild in both cases.
Contractor pay growth eases
Unsurprisingly, the lack of demand for contractors and a fall in placements throughout March impacted contractors’ pay growth, with temporary wage inflation easing to its slowest rate in more than seven years. Permanent starting salaries, meanwhile, grew at their weakest pace since July 2016.
Against a backdrop of strong candidate availability, the fall in contractor hiring, slowing demand for these workers and easing pay growth was recorded across all four of England’s monitored regions, with London experiencing the sharpest decline, followed by the Midlands.
Labour market “on pause”
In response to this worrying trend, REC’s CEO, Neil Carberry, said: “The Coronavirus pandemic has put the labour market on pause.” And while Carberry explained this has resulted in “massive disruption” in the short-term, he stressed that “we must remember that this has to be done in order to protect businesses and save lives.”
KPMG’s Vice-Chair, James Stewart, added that “uncertainty grips the nation”, before urging companies to remain resilient in the face of COVID-10: “UK business needs to do what it can to adapt and survive this pandemic – and be able to emerge in the best position possible to ramp up once the crisis comes to an end.”