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11 January, 2012

This month’s Report on Jobs tells two stories: the deepening of the ‘jobs recession’ and a downturn in temporary employment, reports Richard Exell. This month’s Report on Jobs from the Recruitment and Employment Confederation tells two stories. One – the deepening of the ‘jobs recession’ – is pretty simple, but the other is a bit more complicated: a downturn in temporary employment.

The REC’s conclusion seems to be that this second story underlines the first and the jobs picture is even worse than you might imagine at first.

The jobs recession has been a strong feature of the official employment figures for a while now and today’s figures give us a better understanding of what’s going on.

The Recruitment and Employment Confederation is the trade body for employment agencies, which have a strong feel for the demand for labour in the upper half of the labour market.

Agencies are less likely to be involved in recruiting less skilled, lower paid workers, where the Jobcentre Plus vacancy figures are a better guide.

Jobcentre Plus vacancies never completely recovered from the recession and have been depressed for well over a year. REC figures for both temporary contracts and permanent placements, on the other hand, rose in a healthy manner at first.

But appointments were slowing down through most of 2011 and in December, the number of people placed in permanent jobs fell for the third month in a row. December also saw the first fall in temporary and contract billings for two and a half years.

As Table 1 shows, the figures for vacancies (as opposed to placements) are more positive and did increase, but the same picture of decelerating demand is clear:


REC Job Vacancy Index

50 = no change on previous month

The drop in demand was matched by an increase in supply – for permanent staff “the sharpest in two years” – and the availability of temporary staff “improved at the fastest rate since October 2009”.

So it isn’t surprising that REC members reported that pay for permanent staff hadn’t changed from November and there was a small fall for temporary staff, the first for 11 months.

The fall in temporary and contract billings is marked. REC’s index is based on whether their members say billings are up or down from the previous month.

As Table 2 shows, it’s instructive to compare the results for July and December:


Temporary/Contract Staff Billings

This is important because, until recently, one of the features of the labour market since the recession has been the growth in temporary employment.

As Graph 1 shows, ONS data has shown a steady increase until the start of the summer, followed by a sharp fall.
 It is unlikely that this trend is related to the Temporary and Agency Workers’ Directive.

Kevin Green, the REC’s chief executive, pointed out in the Financial Times (£) that any impact on temporary employment is more likely to appear in the figures for this month, when the Directive began to protect temporary workers. In any case the effect is likely to be “small and short-term”.

Instead, the REC explains their figures as:

“A clear indication that businesses are too nervous to even make short-term commitments, given the continued uncertainty across the eurozone and so much talk of a tough year ahead.”

If REC is reading their members’ responses correctly, employers are very insecure about the near future. Businesses may be overreacting, but it is hard to blame them for feeling insecure.


• Manufacturing’s recovery ends before it starts – Tony Burke, January 10th 2012

• “We are spiralling into a prolonged and ghastly depression”: The economy in 2012 – Ann Pettifor, January 6th 2012

• Design agencies face a second year of talent exodus in 2012 – Rachel Fairley, January 3rd 2012

• Unemployment: How Cameron and Clegg are letting the next generation down – Rachel Reeves MP and Stephen Timms MP, December 14th 2011

• Jobs market hit by “the double whammy of falling business and consumer confidence” – Richard Exell, December 7th 2011