UK employers hire more permanent staff for first time in a year

Unemployment is down to its lowest in more than 40 years and starting pay rose faster as business confidence rose.

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Employer activity had been sluggish due to uncertainties such as Brexit and the UK's 2019 elections [File: Peter Nicholls/Reuters]

Employers in the United Kingdom last month increased their number of new permanent staff for the first time in a year, reflecting a modest rise in optimism after December’s election, a survey of recruiters showed on Friday.

The figures from the Recruitment & Employment Confederation (REC), a trade body, add to signs that business confidence nudged up at the tail end of 2019, after being depressed by uncertainty over Brexit and the unclear political outlook.

“With a new government in place and the path ahead looking more predictable, some businesses have decided that they have waited long enough,” REC chief executive Neil Carberry said.

REC’s permanent staff placement index rose to 51.9 in December from 48.8 in November, its highest since December 2018 and above the 50-mark that divides growth from contraction for the first time since February.

A broader index of demand for staff rose to a three-month high, as demand for temporary staff accelerated by less.

Official data, which tends to lag behind trends in the REC data, showed renewed hiring in the three months to November after the biggest loss of jobs in four years during the three months to October.

Unemployment is its lowest since 1975, as lingering uncertainty over Brexit, coupled with generally tight labour market conditions, led to a further marked fall in candidate numbers.

“As a result, starting pay rose for both permanent and short-term staff, and at slightly quicker rates than in November,” REC said in a statement on Friday.

The REC survey took place between December 5 and December 17, so included responses after Prime Minister Boris Johnson won a large majority in the recent election, removing doubts over whether the UK would see a big shift in political direction under Labour Party leader Jeremy Corbyn or delay its January 31 European Union departure.

A separate survey of purchasing managers by financial data company IHS Markit, published on Monday, showed increased optimism from firms polled after the election compared with those who replied just before.

However, the REC said some of the pick up in demand for permanent staff could reflect tax changes that make it harder for employers to avoid social security payments by classifying workers as self-employed contractors.

Johnson has also said he will not seek any extension to a tariff-free post-Brexit transition period, raising the prospect of business disruption next year if long-term trade talks cannot be concluded swiftly.

“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,” said James Stewart, vice chair of accountants KPMG, who sponsor the survey.

Source: Reuters