Brexit blamed for slowest rate of hiring permanent staff in three years

Amidst political and economic uncertainty, the amount of workers hired for permanent roles has dropped at the quickest rate for over three years.

This is according to a joint Recruitment & Employment Confederation (REC) and KPMG report which found that the number of people placed in to permanent roles dropped for the sixth month running in August as well as the labour market “softening”.  The report stated the reason for this is due to “many firms delaying hiring decisions due to Brexit-related uncertainty.”

Candidates are more reluctant to look for new roles due to the current political and economic climate the UK is in.

The demand for staff rose at the weakest pace since the start of 2012 with temporary recruitment remaining close to its previous level of a 75-month low.

However, starting salaries for permanent staff did continue to rise in August as competition increase for talent.

Kay Cooper, managing director for RPO in EMEA for Korn Ferry, a management consultant said:

Businesses are operating in a dynamic environment where nothing is certain and ambiguity is a constant, and Brexit and other geopolitical factors are accentuating this volatility. But what does not change is the fact that success begins and ends with your people – even more so now that organisations need the adaptability, creativity and strategic thinking to navigate this complex landscape.

In the wider economic context, it’s understandable that businesses are reversing the trend of the last few years and are holding back on new hires. But this phenomenon ultimately illustrates that for most businesses, HR and recruitment are seen as cost centres, to be cut back in times of uncertainty.

This is unfortunate, as having the right people onboard and ensuring that you’re getting the most out of them is absolutely vital to prosper in difficult times. When pursued in a strategic way, talent acquisition and management can become an enduring point of advantage for businesses, and HRs should use these times as an opportunity to prove their value to the business as a profit centre.

Neil Carberry, REC chief executive, said:

The figures are a sobering reminder to politicians of all parties that national prosperity relies on businesses creating jobs and growing careers. Britain’s record on jobs is world-leading. It’s a key part of our economic success, with recruiters at the forefront of it. And there are still great opportunities out there for those looking for a new job and a boost in earnings.

But all this rests on business confidence – the confidence to invest, to hire someone, to try something new – and it’s clear that things are getting harder. Permanent placements have now dropped for six months in a row and vacancy growth is slowing. While we continue to benefit from the flexibility of our jobs market as demand for temps holds steady, today’s survey emphasises the real world impacts of the political and economic uncertainty businesses are facing.

The first priority should be avoiding a damaging no-deal Brexit and giving some stability back to British businesses, so they can drive the prosperity of the whole country.

This report was complied by IHS Markit, a global information provider, from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultants.

Darius is the editor of HRreview. He has previously worked as a finance reporter for the Daily Express. He studied his journalism masters at Press Association Training and graduated from the University of York with a degree in History.