New research shows how the continuation of lockdown restrictions is affecting recruitment decisions – with permanent vacancies on the decline and temporary roles seeing their slowest level of growth.

Research by KPMG and REC which analysed hiring decisions in February found that permanent staff appointments fell for the second month running, although this occurred at a less rapid rate than in January.

Furthermore, the growth in the number of temporary placements has also eased to a seven-month low, indicating that recruitment has been adversely affected by the continuation of COVID-19 restrictions.

However, the demand for staff largely stabilised in February. Demand for employees to fill permanent vacancies remained stable while the demand for temporary workers increased solidly.

In addition, staff supply also saw a marginal rise – the weakest since start of the pandemic. The report found that while permanent worker availability was little-changed on the month, temporary candidate numbers increased at a slower pace. Overall, this was attributed to the latest lockdown and concerns over job security which had dampened candidate availability.

Permanent starting salaries also witnessed a decline over February – pay trends which recruiters claimed were caused by “sluggish market conditions”. However, temporary wages were broadly stable throughout the month.

Analysing the various regions of the England, the South of England reported the sharpest decline in the number of permanent placements. This was swiftly followed by London which also saw a sizeable fall.

Nursing, medical and care were the job categories which saw the highest increase of demand for permanent staff over the month. This was followed by IT & Computing. Conversely, Hotel & Catering saw the sharpest drop in permanent vacancies.

James Stewart, Vice Chair at KPMG, said:

Business confidence remained subdued in February, with a further drop in permanent appointments and the lingering pandemic uncertainty still evident.

The jobs market remains on hold with hiring decisions stalled, people reluctant to seek new roles and the growth in temporary billings has also slowed. However, it’s encouraging that it’s not seeing the big drop in vacancies or hiring that were seen in the first national lockdown.

There’s a long way to go to rebuild confidence in the UK jobs market. But with the Covid roadmap to recovery in place and the Chancellor’s Budget announcement to further support businesses and individuals, there is reason for optimism for the UK’s future workforce.

Neil Carberry, Chief Executive of the REC, said:

Given the national lockdown that has been in place for the past two months, the labour market has coped remarkably well. Permanent placements have only fallen modestly, while vacancies and candidate availability have stabilised. Meanwhile, businesses have continued to use temporary work to help them through this tough period. We are well-positioned for a recovery as restrictions are lifted – but both businesses and workers will need help to do so.

With that in mind, there was some good news in the Budget. It was sensible to extend support measures like the furlough scheme and business tax deferrals while health restrictions are still in place, and expand support for the self-employed. But more could have been done to tackle the big economic transitions we face, encouraging growth and reducing unemployment. For example, cutting employers’ National Insurance to encourage job retention and creation, replacing the failed apprenticeship levy with a flexible levy that meets the economy’s needs, and investing in job finding services with recruiters at their heart.

*This research was taken from the REC and KPMG’s ‘UK’s Report on Jobs’ which analysed recruitment trends over February 2021.