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Langley James IT Recruitment Market Review – London – January 2019

February 18, 2019 . 11:44 am

Key points from January survey:
– Slight decline in permanent staff appointments 
– First fall in contract billings for two-and-a-half years
– Firms lift starting pay sharply to attract candidates

Commenting on the latest survey results, Bina Mehta, Partner at KPMG UK said:
“This is a worrying start to the year for London employers who, despite creating jobs are facing a perfect storm of economic uncertainty and a dwindling talent pool. 
“A decline in overseas candidates, and nervous jobseekers staying put to see how Brexit plays out has left many employers in the Capital facing a war for talent and a much bigger wage bill in getting their vacancies filled.
“As a business services hub it is people who drive the capital’s productivity and unless the current situation changes quickly, it will no doubt have a negative impact on our productivity levels and London’s economy as a whole.”

Neil Carberry, Chief Executive at the REC, said:
“This is the first month since July 2016 where permanent placement numbers have dropped, with weaker – but still positive – performance for temporary roles, and the lowest rate of vacancy growth for over two years. But we should be careful not to overreact – employment rates are high, and the performance of our labour market overall is still strong. That said, the survey results are a sharp reminder to politicians in Westminster and in Brussels of the need to provide businesses with clarity about the path ahead, so they can invest with confidence.”

Staff Appointments

Permanent placements fall in January
For the first time in six months, permanent staff appointments in London declined during January. Some survey participants indicated that recruitment had been put on hold due to political and economic uncertainties, while others cited skill shortages. That said, the rate of contraction was marginal overall.
First drop in contract billings for two-and-a-half years
Recruitment consultancies recorded a reduction in contract billings at the start of 2019. Although only slight, the fall interrupted a 29-month period of expansion. Anecdotal evidence pointed to the non-renewal of contracts that came to an end. The trend for the capital contrasted with sustained, albeit weaker, growth at the UK level.

Job Vacancies
Although demand for permanent workers in London continued to rise in January, growth lost further momentum. The expansion was the slowest in over two years. Short-term vacancies likewise increased to a lesser extent. The rate of expansion was the weakest since November 2016 and below its long-run average.

Staff Availability

Steeper deterioration in permanent candidate supply
Permanent staff availability in London decreased further in January. The contraction was the second-quickest in over three years, slower only than that recorded last May. According to panel members, there was a particular shortage of EU candidates. A sharper reduction in permanent staff supply was likewise noted at the UK level.
Contract staff supply declines further
Amid reports of staff demand exceeding supply, the availability of candidates for short-term jobs in London continued to decrease in January. The respective index has been in contraction territory throughout the past five-and-a-half years, with the latest figure indicative of a faster pace of reduction than seen in December.

Pay Pressures

Starting salary inflation remains elevated
Salaries awarded to new joiners rose in January, as has been the case since mid-2013. Despite easing from December, the rate of inflation was the second-strongest in over three-and-a-half years and the highest of the four English regions. Competition for scarce labour, coupled with a hesitancy among workers to switch jobs, boosted starting pay in the capital.
Solid increase in contract wages
A higher cost of living and competition for candidates reportedly led companies to lift contract wage rates in January. The pace of inflation softened to a five-month low, but remained robust and above its long-run average. However, the rise in contract pay in London was less marked than for the UK overall.

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 staff appointments fell across the UK for the first time in two-and-a-half years during January. Albeit only marginal, the decline was driven by contractions in three of the four monitored English regions. The South of England was the only area to record growth. Meanwhile, there was an overall increase in contract staff billings across the UK in January. However, the latest expansion was the softest since September 2015, as both London and the North of England recorded declines. The Midlands posted the fastest rate of growth, with a strong increase overall.
Candidate availability
January data signalled the sharpest fall in permanent candidate availability in the UK since May 2017, extending the current run of decline to 69 months. The steeper contraction in available permanent workers was driven by London, which registered its strongest downturn for eight months and the fastest across all English regions. There was also a fall in availability of contract workers across the UK in January. The overall pace of decline was sharp and the fastest for 14 months. At the regional level, quicker falls in all four monitored English regions drove the latest decline, with the Midlands recording the sharpest contraction.
Pay Pressures
UK permanent starting salaries rose markedly during January. The pace of inflation accelerated to its fastest since October 2018. Quicker salary growth in the Midlands and South of England contrasted with slower expansions in London and the North of England. Wages earned by contract workers in the UK also rose in January. Though sharp overall, the increase in contract pay rates was weaker than that seen in December and the slowest for three months. The South of England posted the quickest rise, followed by the Midlands, London and the North of England respectively.

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

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.

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