Hiring decreases to lowest point since 2009 recession; HR opportunities also affected, say specialists

The number of people being hired on a permanent basis has dropped more quickly than at any point since May 2009, according to a widespread study of recruiters.

The Recruitment & Employment Confederation (REC) report, compiled by Markit, found that nearly 38 per cent of recruiters placed fewer people in permanent positions in July, compared with 32 per cent in June.

July was the second successive month that placements had decreased. Many respondents indicated that uncertainty around Brexit had prompted clients to seek short-term staffing solutions, with temporary and contract hiring increasing among 34 per cent of those surveyed, up 2 per cent on June.

Consultancies based in London were most affected. Only the north of England saw a rise in permanent placements, but even this was the weakest increase in more than three years.

REC chief executive Kevin Green said: "The UK jobs market suffered a dramatic freefall in July, with permanent hiring dropping to levels not seen since the recession of 2009. Demand for staff remains strong with vacancies continuing to rise, but the sharp fall in placements suggests that businesses are highly cautious about committing to new hires. Economic turbulence following the vote to leave the EU is undoubtedly the root cause.

"The record-high employment rate and ongoing skills shortages have made it difficult for employers to find suitable candidates for the roles available in the past, and this remains the case. We're now seeing the added problem of individuals deciding to stay put rather than change jobs in the current environment.”

Nursing, medical and care was the most in-demand category for permanent and temporary staff during July. Permanent construction workers saw a decline in demand for their services, and executive and professional staff were least likely to find temporary roles.

Salaries for permanent jobs increased at the slowest pace in more than three years, while temporary and contract workers’ pay rose at the slowest rate since February.

The drop in permanent hiring has also been noticed by HR recruiters. Clare Thornton, partner at HR specialist Frazer Jones, said: "During July, we saw some slowdown in permanent appointments because of organisations having been cautious in May and June, awaiting the outcome of the Brexit vote. However, despite uncertainty on the practical outcomes for business post referendum, the market has rebounded strongly in July and we are confident that August and September figures for new appointments will look very different.

"We also have the seasonal impact of the summer, which makes it is very hard to know the true impact of Brexit. To date, however, a large number of our clients are operating 'business as usual' and haven't altered their plans for recruitment in the second half of the year. We would describe the outlook of many of our clients as cautious but positive."

Green said it was important not to jump to conclusions: "The truth is, we don't know what long-term [effects] the referendum result will have on UK jobs; with the political situation becoming more stable and the Bank of England making sensible decisions, we may well see confidence return to the jobs market more quickly than anticipated."

Totaljobs also released its Employment Index today, revealing that 44 per cent of UK businesses believe Brexit won't affect the number of people they hire. The number of jobs posted on the the recruiter's website rose by 4 per cent from May to June, it said. But 48 per cent of jobseekers are more concerned about finding a job now than before the EU referendum.