The political uncertainty caused by Brexit is continuing to affect the South West’s economy with firms putting off hiring new full-time workers, a new report says.
Recruitment consultancies across the region indicated that subdued market confidence continued to weigh on labour market conditions in July 2019 and permanent staff appointments fell for the fifth month in a row, albeit at a softer pace than in June.
While there was a slightly stronger rise in vacancies, growth remained lacklustre compared to recent years, the KPMG and REC UK Report on Jobs: South of England revealed.
Brexit-related uncertainty also weighed on candidate supply, though the availability of permanent and temporary workers deteriorated at softer rates compared to the previous month.
Starting pay inflation remained marked overall, as competition for staff continued to place upward pressure on salaries and wages.
Ian Brokenshire, Senior Partner at KPMG Plymouth, said: “Political uncertainty is still biting in the South West. Businesses continue to put off long-term decisions and relied heavily on temporary staff in July. When compared with the rest of the country, temporary staff appointments in the region rose at the highest rate last month.
“This is despite the fact that both temporary and permanent availability declined at quicker rates compared with other regions – with workers nervous about switching roles thanks to the uncertainty.
“In terms of skill shortages in the South West – to name just a few – accounting and finance, construction, and hospitality are being particularly hard hit for both temporary and permanent vacancies.
“Greater competition for workers means we’ve seen yet another increase in permanent and temporary wages, but average weekly earnings in our region still lag behind the rest of the country at £571 a week.”
The KPMG and REC, UK Report on Jobs is compiled by IHS Markit from responses to questionnaires sent to around 150 recruitment and employment consultancies in the South of England.
Recruitment & Employment Confederation chief executive Neil Carberry said: “Our flexible jobs market remains a key strength for the UK as we navigate an uncertain time.
“While we are seeing a concerning weaker trend in permanent placements bed in, the rate of change is slow, employment rates are high and starting salaries are growing. Businesses will be looking to politicians for a pragmatic way forward to help them turn this around – not just on Brexit, but on domestic policies too.
“The new government should be focused on delivering the negotiated exit from the EU businesses need, but also on avoiding damaging changes that will undermine the strength of our jobs market.
“An improved approach to immigration, reforms to the apprenticeship levy and avoiding hasty changes to contractor tax rules should be top of the list.
“In difficult times such as these, recruitment specialists are an invaluable source of local and industry expertise to businesses looking to hire new staff.
“The REC is helping its members to do this with our new, local workforce intelligence data, so that they can continue to provide employers with the right people to grow their business.”
