Companies are holding off from hiring further permanent staff and taking on more temporary workers, according to figures that suggest uncertainty over the outcome of June’s EU referendum is putting employers in wait-and-see mode.
The number of people placed in permanent jobs continued to increase during March but at the slowest pace for six months, according to a survey of recruitment companies. At the same time, the hiring of temporary and contract staff rose at the sharpest pace for four months, according to the poll by Markit and the Recruitment and Employment Confederation (REC).
The findings echo other business surveys that suggest that, with opinion polls tight, companies are delaying hiring and investment decisions until after the 23 June vote on Britain’s membership of the EU.
The REC’s director of policy, Tom Hadley, said: “While we expect jobs growth to continue overall, we are now seeing the effects of current uncertainty in the marketplace on UK employment.
“Global economic headwinds plus uncertainty around a possible Brexit make it likely that slower growth in permanent hiring will remain over the next few months as employers take a wait-and-see approach. In contrast, temporary hiring is on the up as businesses seek to meet increasing demand while retaining the ability to react quickly to any threats that might be around the corner.”
REC’s survey of 400 UK recruitment consultancies also pointed to softer growth in demand for staff. The latest increase in vacancy numbers was the weakest for 33 months.
Official data shows pay growth has been sluggish in the UK in recent months despite record employment. The REC report suggested that growth was better when based just on new hirings. It found salaries for people placed in permanent jobs continued to rise in March and that hourly rates for temporary staff rose at the sharpest pace in three months.
REC said the salary growth was probably driven by the “national living wage”, which came into force this month and requires employers to pay all workers 25 and over at least £7.20 an hour, up from the previous minimum hourly wage of £6.70.
The news of a slowdown in permanent recruitment follows a separate report this week that showed growth in the UK’s services sector almost came to a standstill last month as companies weighed up a combination of risks, including the looming possibility of Britain’s exit from the EU. The sector, which includes restaurants, bars and hotels, experienced its weakest quarter in three years, according to the Markit/Cips PMI index.