Demand for IT contractors increased in July to its highest level in five months as staff appointments in both the permanent and temporary sectors dropped at a much weaker pace than seen over lockdown, according to the latest Report on Jobs, compiled by KPMG and the Recruitment and Employment Confederation (REC).
The report’s index representing demand for temporary IT skills reached 40.2 in July, up from 29.3 in the previous month. This is the highest score seen in the index since February, the last month of the “old normal”, when the index read 49.3.
Permanent IT staff were also being sought after as the UK’s lockdown measures were eased further: “Demand for permanent IT staff is recovering at around the same rate as for temporary staff,” a REC spokesman said. “As for the reasons why, recruiters noted that it was mainly due to the gradual easing of lockdown, and re-opening of the economy.”
Across all business sectors, permanent staff appointments and temporary billings both continued to fall, but at the softest rate for five months, with the Covid-19 pandemic continuing to affect hiring decisions as the number of vacancies advertised declined yet again.
Widespread redundancies drove a substantial increase in the availability of workers, with the number of people seeking work rising at the second-fastest rate on record. The number of people seeking temporary work (including contract) rose at the fastest rate in over two decades of data collection. The declining demand for staff combined with the increased labour supply meant that pay rates continued to fall markedly.
Regionally, temporary and contract billings declined markedly in both London and the South of England, with mild increases reported in the Midlands and the North of England. Permanent placements fell across all regions of England, albeit in a more gradual drop than has been seen in recent months, with the biggest decline in London.
“While permanent placements and temp billings still decreased last month across most areas of the country, the pace of decline has slowed hugely as the tide turned on lockdown,” said Neil Carberry, chief executive of the REC. “With the economy opening up through June and July, we would expect an improving trend in the coming months as firms recover from the worst of the crisis. The fact that demand is now increasing for temporary blue collar and construction workers is also a good sign.
“There are far fewer vacancies in the market than before March, and more people looking for jobs. Recruiters will be key to helping people build confidence and find work – but the reality is that government needs to help kickstart hiring. Reducing employers’ National Insurance rates would cut the cost of hiring, and a good Brexit trade deal will also support stronger business confidence and investment.”
James Stewart, vice chair at KPMG, said: “With the softest rates of decline seen for five months, it’s encouraging to see the downturn in recruitment easing as parts of the economy reopen.
“However, we are still a long way from being out of the woods, with hiring plans remaining on ice and the uncertain outlook still weighing heavily on business’ recruitment decisions.
“As the furlough scheme unwinds, unemployment is likely to rise further, proving both an opportunity and challenge for government to create training and skills programmes for jobseekers – and help bring confidence back to the UK workforce.”
The Report on Jobs is compiled by IHS Markit based on responses to questionnaires sent to a panel of around four hundred UK-based recruitment and employment consultancies.
6th August 2020.