Permanent UK staff appointments rose for the first time in a year last month, following the December election, although experts still described the growth as ‘modest’.
According to a survey by the Recruitment & Employment Confederation (REC), firms have started to approve new hires following a long period of delayed decision-making. As a result, the permanent staff placement index rose to 51.9 in December from 48.8 in November, its highest since December 2018.
“With a new government in place and the path ahead looking more predictable, some businesses have decided that they have waited long enough,” said REC chief executive Neil Carberry.
While permanent vacancies rose at the quickest pace for three months, the rate of expansion was “modest”, remaining close to a decade-low. In addition, the growth of demand for temp workers has dropped since November.
The steepest increases were seen in blue-collar and engineering industries, while the retail sector saw a marked fall in demand for permanent workers.
While political and economic stability has contributed to the increase in demand for permanent staff, the REC said it could also reflect the upcoming IR35 tax changes, which make it harder for companies to employ freelancers or flexible workers without making them full employees.
The government announced a review into the changes yesterday, but said that there would be no amendments to the legislation following the review.
“Feedback from recruiters shows that the upcoming IR35 changes are affecting both placements and the availability of flexible workers,” said Carberry. “This is a delicate period for the jobs market, and is the worst time to push through sweeping changes to the way we tax contractors.
“It is right that government engages further with business on the changes, but they should also delay implementation until next year to allow time for a full, independent review and effective regulation of the umbrella sector. As it stands, the government risks damaging ethical businesses and encouraging non-compliance.”
Boris Johnson is also planning to redraft his government’s Brexit bill to rule out any extension of the transition period beyond 2020 - despite warnings from Brussels that a comprehensive trade deal cannot be achieved within that time frame. This puts another ‘no deal’ scenario back on the table, which could mean further disruption to the British economy.
“UK business will be hoping for quick government action to get the UK back on the path to growth including an investment in upskilling the workforce,” said James Stewart, vice chair of professional services firm KPMG, which sponsors the survey.
“Lingering uncertainty around the Brexit deal to be secured will continue to weigh on employers’ decision making around hiring and investment over the coming months, as well as job-seekers desires to seek new opportunities.”