Britain’s labour market went into “freefall” last month according to recruiters, which have reported the quickest drop in permanent job placements since 2009.
The survey of recruitment consultancies comes a day after the Bank of England expected unemployment would increase from 4.9 to 5.5 per cent as a result of the UK’s decision to leave the EU.
Recruiters responding to the survey said employers were wary because of the uncertainty caused by the Brexit vote on June 23. London appeared to be worst hit, but permanent job placements fell in the Midlands, the south and Scotland too. The north saw an unexceptional rise.
The surveys from the Recruitment and Employment Confederation are not approved data, but economists watch them closely for early signs of tipping points in the labour market. Unemployment has been dropping for years in the UK and reached the lowest in a decade on the eve of the Brexit vote. However, Mr Carney cautioned on Thursday that about 250,000 people would now lose their jobs.
The survey inferred there had been a drop in confidence rather than demand. Temp billings increased in every region as employers resorted to casual staff to meet demand instead of making permanent hires. Salaries for permanent hires continued to increase, but at the slowest pace in three years.
Kevin Green, REC’s chief executive, stated the jobs market “suffered a dramatic freefall in July, with permanent hiring dropping to levels not seen since the recession of 2009.” He said the rise in temp billings showed there was still demand for staff, but the fall in permanent placements “suggests that businesses are highly cautious about committing to new hires”.
“While there are worrying signs, it’s important we don’t jump to conclusions from one month’s data. The truth is we don’t know what long-term consequences the referendum result will have on UK jobs; with the political situation becoming more stable and the Bank of England making sensible decisions, we may well see confidence return to the jobs market more quickly than anticipated.”
There will be no official data on how the Brexit vote has affected the labour market until September.
Source: Financial Times