The number of job vacancies in the UK dropped further below a million, to its lowest level in more than two years, amid broader signs that companies are reluctant to hire full-time staff while the economic outlook remains uncertain.
(Bloomberg) — The number of job vacancies in the UK dropped further below a million, to its lowest level in more than two years, amid broader signs that companies are reluctant to hire full-time staff while the economic outlook remains uncertain.
The Office for National Statistics said Tuesday that vacancies fell 43,000 to 988,000 from July to September, the 15th consecutive period in which the number has declined. It reached a peak of 1.3 million in March to May last year when companies were struggling to fill roles due to shortages of workers.
A drop in vacancies shows the labor market is easing. However, recruitment firms have said that British companies are now taking on fewer permanent staff, with employers turning to temps given concern over business prospects. The ONS data on vacancies does not distinguish between full time and temporary roles.
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London-listed recruiters PageGroup Plc, Robert Walters Plc and Hays Plc all said in trading updates last week that temporary contracts significantly outpaced permanent positions in the third quarter of the year.
Pagegroup said temporary hiring rose 5.8% in the quarter, while permanent recruitment fell 12.1%. Hays reported a 15% drop in permanent hiring, citing tough economic conditions and lower confidence among both employers and candidates.
“For companies under financial stress, hiring someone on a three, six, nine-month contract financially makes more sense than investing in a long-term permanent hire,” said Toby Fowlston, chief executive officer at Robert Walters.
Permanent placements in the UK have been contracting since October 2022, according to the Report on Jobs released by the Recruitment & Employment Confederation, KPMG and S&P Global. They fell again in September as companies were often reluctant to commit to permanent hires.
Meanwhile, temporary staff billings in the UK returned to growth in September after a dip in August, with the most pronounced rise since April.
Recruitment firms’ performance has taken a hit as a consequence, with Pagegroup’s net fee growth coming in below analysts’ expectations in the third quarter. Its shares dropped to the lowest in a year after it cut its operating profit forecast for the full year last week.
Hays’ total comparable net fees fell 7% in the third quarter and Robert Walters’ net fee income slumped 17% compared with the same period last year.
Still, Fowlston believes hiring will recover. “When the market improves, which it will, you’ll see a bounce back in permanent hiring,” he said. “You have to build core teams around permanent hires, ultimately.”
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