The KPMG and the Recruitment and Employment Confederation (REC) report showed that the number of staff appointments in October fell to its lowest level since March. The report, which is compiled by S&P Global from responses to questionnaires is sent to a panel of around 400 UK recruitment and employment consultancies.
The report signalled a further decline in permanent placements in October, extending the current period of contraction to over two years. The rates of decline were the steepest since March, amid reports of reduced demand and hiring freezes at firms. According to some of the recruitment consultants, the late October government Budget had led to uncertainty and reduced activity. Noticeably, higher staff availability was reported, amid reduced number of vacancies in October.
Jon Holt, Group Chief Executive and UK Senior Partner KPMG, explained that the uncertainty over the Autumn Budget saw businesses continue to put hiring plans on hold during October leading to the steepest contraction in permanent staff appointments since March. But employers didn’t turn to temporary staff to fill gaps, with these appointments also facing their biggest reduction in seven months.
Following the Chancellor’s Autumn Budget announcement of tax rises worth £40bn last week, Holt said: “With many of the tax rises announced in last week’s Budget impacting businesses, the expectation from some chief execs is that this could further dampen hiring as companies grapple with absorbing any extra costs.”
October also saw the government table its Employment Rights Bill, which included proposals to introduce day-one rights for unfair dismissal and restrictions on the use of zero-hours contracts.
Neil Carberry, REC Chief Executive, said: “These figures are a timely reminder that demand from employers for new staff has weakened since the election – though the overall picture remains resilient by comparison to pre-pandemic. There are a few positive signs in this month’s data – like more robust performance in London, which is often a bellwether. But things now stand in the balance – firms need to be persuaded to invest, with recent changes to NI thresholds, the minimum wage and prospective changes to employment law all causing concern. Firms will be looking for the Government to deliver a clear, stable growth plan and detailed regulatory changes that enable firms rather than put them off over the next few months. Temporary work in particular is a fantastic way of helping people take steps out of inactivity, and the threat of new employment laws undermining opportunities for workers must be addressed.”
Employers, such as Sainsbury’s and BT have announced this week that the additional costs they face in light of the 6.7% increase to the national living wage and the impact of the increase in employers’ NI contributions.
Sainsbury’s announced yesterday, that the Autumn Budget has led to the supermarket chain warning they will take a £140 million in costs. Sainsbury’s CEO, Simon Roberts, warned that the increase in NI contributions will cause spike in prices. Roberts said that the supermarket will have to take “difficult decisions” following the Autumn Budget announcement. He said the supermarket would try to “mitigate the impact” but that retail sector’s tight margins don’t have that level of capacity to absorb the “unexpected cost inflation that is coming at us as fast as it is”.
Similarly, BT said it was facing additional costs of around £100 million.