London’s job market cooled faster than anywhere else in the UK last month, according to a survey showing the sharpest drop in permanent hires since the height of the Covid-19 pandemic.
The employment report from consultancy firm KPMG and the Recruitment & Employment Confederation, a trade body, indicated the seventh consecutive monthly decline in people placed in permanent roles in April.
Permanent recruiting activity declined at fastest pace since January 2021, when the UK it was in lockdown due to Covid, and for the third consecutive month it was weaker in the capital than in any other region.
Claire Warnes, partner at KPMG UK, said economic uncertainty had made companies ‘cautious about engaging in permanent hiring’, with many announcing hiring freezes or delaying decisions, while others still struggled to find candidates with the right skills.
At the same time, the report notes a pick-up in the hiring of temporary workers, which has grown at the fastest pace in three months. The strongest demand was seen for nursing, medical and caregiving roles.
REC Chief Executive Neil Carberry said the increased demand for temporary workers showed that “there were still plenty of opportunities out there,” even as industries like logistics, driving and food were ” heavily affected by changing consumer behavior” during the cost-of-living crisis.
The survey showed that the demand for permanent staff had weakened in all areas of the economy. However, the public sector has been more resilient than the private sector, where recruiters have experienced the steepest slowdown in the IT and retail sectors, as well as hotels and restaurants.
Recruiters also said it was finally easier to attract candidates after two years of severe staff shortages, with more people looking for work because they were made redundant while others were looking for a better paying role. Again, this increase in candidate availability was more evident in London than in any other region.
Weaker hiring and more jobseekers have yet to quell wage growth, which the Bank of England increasingly sees as a threat to its efforts to kick back inflation, now at 10.1%.to the 2 percent target.
The REC’s wage pressure measurement suggested that the rate of increase in starting wages, although below recent averages, had increased in April, both because employers were competing for skilled staff and because they had to pay more for reflect the rising cost of living.
“Wages are rising sharply for both temporary and permanent new hires in the face of inflation, even as candidate availability is finally starting to improve,” Carberry said.
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