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Langley James IT Recruitment Market Review – London – April 2019

May 15, 2019 . 9:00 am

Key points from April survey:
– Permanent placements contract at sharper pace…
– …despite slower reductions in candidate availability
– First drop in permanent vacancies since late-2016

Commenting on the latest survey results, James Stewart, Vice Chair at KPMG, said:
“This report shows how the UK jobs market has seized up, with both employers and candidates waiting to see which direction Brexit is going to go in. For now, this smothers the prospects for growth and makes it a lot harder for companies looking to innovate.
“Overall employers have hired fewer permanent staff in three of the past four months and most of the firms we’re speaking to say that uncertainty around Brexit is to blame. A subdued public sector is also contributing to the wider picture.
“On the supply side, a high rate of employment and the apprehension of potential candidates means there just aren’t a lot of suitably skilled people out there to hire anyway. This is an increasing problem for firms in technology, health, and engineering who are experiencing a skills gap.
“Concern over the long-term picture means now is a good time to be a temp’ with steep increases in pay for both day rate and short contract workers.”

Neil Carberry, Chief Executive at the REC, said:
“Employers are turning to temp work to support their business and offer people opportunity while the long-term economic picture is unclear.
“We should be proud of how our jobs market has adapted to challenging circumstances. Resolving Brexit will bring some certainty, but we must also take bold steps to fix the underlying problems suggested by these figures.”

Staff Appointments
Sharpest fall in permanent placements since September 2016
Permanent staff appointments in the capital declined for the second successive month in April. Recruitment consultants attributed the reduction to caution around Brexit among firms and employees, as well as candidate shortages. Moreover, the pace of contraction was the quickest seen for over two-and-a-half years.
Moderate increase in contract billings
Recruitment agencies in London continued to signal higher billings received from the employment of short-term staff. Although moderate, the pace of expansion accelerated from March. Some companies indicated increased client demand for contract workers.

Job Vacancies
For the first time since September 2016, permanent job vacancies in London decreased in April. The downturn was the only one seen on a regional basis, with growth evident in the other three English regions. Although demand for contract workers in the capital continued to expand, the pace of growth held close to March’s 73-month low and was the weakest of the four English regions monitored.

Staff Availability
Slower, albeit sharp, fall in candidate numbers for permanent jobs
The number of people willing to undertake permanent employment in London continued to decrease at the start of the second quarter. Anecdotal evidence pointed to apprehension among workers to switch jobs due to market uncertainty, and fewer EU applicants. Despite softening from March, the pace of contraction remained sharp.
Softer reduction in contract staff supply
Candidate numbers for contract positions decreased again in April. According to anecdotal evidence, the latest fall reflected a lack of clarity regarding Brexit and competition from online recruiting platforms. That said, the pace of contraction was the second-slowest in two-and-a-half years. The downturn was reportedly  restrained by students signing up for contract jobs and the non-extension of existing contracts.

Pay Pressures

Further slowdown in starting pay growth for permanent workers
Although pay awarded to newly-placed permanent workers continued to rise in London, inflation moderated for the fourth month in a row. In fact, the latest increase was the slowest since last July. On the one hand, panellists suggested that competition for staff exerted upward pressure on starting pay. On the other hand, there were reports of cooling labour market conditions. 
Renewed increase in contract pay rates
After falling in March for the first time in six years, contract pay growth was resumed in April. Data suggested that a combination of higher demand for short-term staff and lower candidate availability exerted upward pressure on wages. The rate of inflation was solid overall, but below its long-run average.

Official Data: UK Average Weekly Earnings
Data from the Office for National Statistics signalled that average weekly earnings across the UK rose by 5.4% year-on-year to £637 in the final quarter of 2018. London saw the strongest annual rise, with pay up 13.1% to £846. Meanwhile, the weakest increase was in the South East, with average weekly earnings rising by just 0.5% on the previous year to £685.

Regional Comparison

Staff appointments
Permanent staff placements across the UK fell for the second month in a row during April. However, the rate of decline eased from March and was only marginal overall. At the regional level, three of the four monitored English locations recorded lower permanent staff appointments, with the North of England being the only exception.
In contrast, contract billings in the UK continued to increase at the start of the second quarter. The latest rise extended the current sequence of growth to six years. Moreover, the rate of increase accelerated from March and was solid overall. The Midlands was the only monitored English region to record a decline in contract billings during April.
Candidate availability
Although permanent labour supply across the UK continued to fall sharply in April, the rate of reduction was the least marked in just over one year. At the regional level, there were slower declines recorded in each of the four monitored English locations. The quickest deterioration in availability was registered in the South of England, while the slowest was recorded in the Midlands.
Similarly, contract staff availability at the national level fell for the seventieth month in a row during April. That said, the rate of decrease eased to its slowest since January 2017. Regional data pointed to softer declines in London and the North of England, and faster falls in the Midlands and the South of England.
Pay Pressures
Permanent starting salaries continued to increase sharply across the UK in April. That said the rate of inflation edged down to the slowest for two years. The North of England and London registered less robust rises in starting salaries. However, rates of increase picked up in the Midlands and the South of England.
Conversely, hourly pay rates for contract staff in the UK grew at the fastest pace for three months during April. The North and the South of England recorded quicker rises in contract wages, whereas the Midlands signalled the slowest rate of pay inflation since last October. Notably, London saw wages rise at a solid rate following a fractional decrease in March.

About Langley James
Langley James was founded in 1999 by James Toovey, a highly respected recruitment industry professional.  James wanted to provide something unique: a bespoke recruitment service which was founded on service excellence.  With offices in London and Chester, we are now providing our recruitment services throughout the world and over the last 19 years have worked with some of the most respected companies.

The average time form taking a role…
– and Delivering a Qualified Shortlist of Candidates          3 days
– and First Confirmed Interview                                             5 days 
– and Confirmed Placement                                                     8 days

To find out why so many companies turn to Langley James for support in fulfilling their IT recruitment needs, call and speak to one of our specialist consultants today on 0207 788 6600.

In conjunction with: IHS Markit and sponsored by the Recruitment and Employment Confederation.