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Langley James IT Recruitment Market Review – London – December 2018

January 10, 2019 . 4:47 pm

Key points from December survey:
– Sustained fall in staff supply drives starting pay higher
– Agencies signal weaker rise in permanent appointments…
– …despite robust uptick in job vacancies

Commenting on the latest survey results, Bina Mehta, Partner at KPMG UK said:
“Although December is always a bit of lean period in the jobs market, the impact of Brexit has amplified that effect, particularly in London. Employers are having to offer increasingly attractive and creative packages to tempt new talent on board. With salary inflation at a 53-month high, this is an unsustainable situation for many employers, particularly at an SME level where profitability drives growth.
“As a business services hub it is people who drive the Capital’s productivity and with employers facing the prospect of being unable to fill their vacancies – it could have a negative impact on our productivity levels and London’s economy as a whole. 
“There is good news for experienced staff however, and if you aren’t looking forward to another year in your current job, now is a good time to go job hunting.”
Neil Carberry, Chief Executive at the REC, said: 
“It’s no surprise that growth in new permanent jobs dropped to its lowest level in almost two years last month, because economic uncertainty is now affecting companies’ hiring plans. But the underlying strength of our labour market is still there – vacancies are high and contract placements rose in the run-up to Christmas. There are opportunities out there for people who want to change job in 2019.”

Staff Appointments

Permanent staff appointments rise at softer pace
Recruitment consultancies in the capital placed more workers into permanent jobs for the fifth month running in December. However, the upturn was modest and the weakest in this sequence. A hesitancy among staff to change career as well as shortages of EU candidates curbed growth, according to survey participants.
Contract billings growth accelerates from November
December saw the expansion in agencies’ billings received from the employment of short-term staff pick-up from November’s recent low. The upturn was stronger than the long-run series average and in line with the UK trend.
Anecdotal evidence suggested that additional London-based clients had been secured over the month, leading to the rise in contract billings.
Job Vacancies
Demand for permanent labour in the capital continued to expand sharply at the end of the year. Although the pace of growth moderated to a six-month low, it remained above the UK-wide average. Conversely, contract vacancies in London rose at a pace that was below the national trend. The increase was nevertheless robust by historical standards.

Staff Availability

Slowest fall in permanent staff availability for over a year
The number of jobseekers willing to undertake full-time employment in the capital continued to decline in December. Despite being marked, the pace of contraction was the weakest seen since November 2017.
Brexit uncertainty was cited as a key reason leading to candidate shortages in London at the end of the year.
Contract staff supply declines to lesser extent
Remaining below the 50.0 no-change mark, the seasonally adjusted Temporary Staff Availability Index continued to point to candidate shortages in London. However, rising to a 26-month high, the latest figure was indicative of a slower and only modest pace of reduction. At the UK level, a softer contraction was likewise noted, though one that remained more pronounced than in London.

Pay Pressures

Permanent starting pay inflation reaches 53-month peak
Amid reports of candidate shortages and counteroffers, starting pay awarded for permanent labour in the capital continued to increase in December. Furthermore, the rate of salary inflation accelerated to the strongest for just under four and- a-half years. Conversely, starting salary inflation at the UK level eased to a four-month low, and remained below that recorded in the capital.
Marked rise in contract pay across London
December data highlighted a twenty-seventh successive monthly rise in contract wages across London. The increase was marked and broadly similar to those seen in October and November. According to survey members, competition for scarce skills continued to feed through to higher pay rates. The rate of wage inflation in the capital was slightly weaker than noted across the UK as a whole.
Official Data: UK Average Weekly Earnings
Latest data from the Office for National Statistics showed that average weekly earnings across the UK increased by 4.2% on an annual basis over the third quarter of 2018. The East Midlands posted the strongest year-on-year
rise in pay, up 7.4% to £554. The steepest fall was meanwhile seen in the North East, where weekly earnings were down -6.4% compared to a year ago to £494.

Regional Comparison 

Staff appointments
Permanent placements continued to increase across the UK in December. Though solid, the latest rise was the softest recorded since April 2017. The slowdown was driven by weaker expansions in three of the four monitored English regions. The South of England was the only area to record a sharp rise in permanent staff appointments. At the same time, UK contract billings grew at a faster rate than in November. The increase was also slightly quicker than the average for 2018. The South of England registered the steepest rate of expansion, while the Midlands was the only covered English region to report a softer rise.
Candidate availability
Permanent labour supply across the UK fell for the sixty-eighth month in a row during December. The decline was quicker than that seen in November and sharp overall. At the regional level, permanent staff availability fell at faster rates in the South and North of England, and at weaker rates in London and the Midlands. Meanwhile, there was a softer decrease in contract worker availability across the UK during December. The rate of deterioration eased for the second month in a row to reach its least marked pace since March. Three of the four monitored English regions reported a softer fall in contract candidate availability, with the North of England the only area to see contract worker supply fall at a steeper rate.
Pay Pressures
Permanent starting salaries continued to rise sharply across the UK during December. This was despite the rate of inflation edging down further from September’s recent peak. The UK trend was driven by slower rises in the Midlands and the South of England, while faster increases were seen in London and the North of England.
Similar to the trend for permanent salaries, contract pay rates rose at a softer pace at the national level during December. Nonetheless, the increase was still sharp overall and faster than the average for 2018. The slowdown was broad-based at the regional level, with all four of the monitored English regions recording slower rates of contract wage inflation.

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 18 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

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