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UK job market faces challenges despite continued growth REC report shows

The latest REC Jobs Report (compiled by Markit) shows that the UK labour remains healthy despite a number of headwinds on the horizon.

February’s data pointed to a further increase in permanent staff placements with the rate of expansion at a 3-month high. Temp billings rose at the same pace as in January. The level of available job vacancies continued to rise in February with the rate of growth marked and the fastest in six months. Demand for permanent staff continued to show a stronger trend than that for temps.

The availability of staff for both permanent and temporary/contract roles continued to fall in February. However, the rate of decline eased in each case to the slowest in at least two years. Starting salaries for successful permanent candidates rose at the fastest pace in three months during February. However, temp pay growth eased, hitting a 33-month low.

Despite the encouraging numbers, REC chief executive, Kevin Green, stressed that there were a number of threats to its continued strength:

“The UK labour market is at a critical juncture. Permanent hiring improved last month, demand for staff remains strong, and pay is going in the right direction – but serious threats are looming just around the corner.

“Next week the Chancellor will announce his plans for the coming financial year, at a time when recruiters across the country are reporting serious skills shortages alongside buoyant jobs growth. Now is not the time to put up additional hurdles that could throw the jobs-rich recovery off course.

“The introduction of the National Living Wage on April 1st, closely followed by tax changes on April 6th, will disrupt hiring strategies for many businesses. Employers will seek to offset rising wage bills, for example by scaling back recruitment and increasing automation. This could weaken future demand for staff.

“In June, the EU referendum carries a very real risk that business confidence will be curtailed and investment in hiring could falter. It’s vital that we have an informed debate about the impact the referendum might have on jobs, both in the short and long term. All parties must remember that UK employers need access to the global labour market in order to thrive.

“Global economic headwinds only add to the uncertainty around what the months ahead hold, and the Recruitment and Employment Confederation calls on the government to avoid further destabilising the UK jobs market in next week’s Budget.”