• Swindon & Wiltshire Economy
• Monday November 11 2024
• Author Name: Peter Davison

Budget uncertainty and NI rises hit jobs market

Uncertainty around the latest Budget has hit recruitment in the South of England, with increases to employers’ NI likely to dampen hiring for a while.

Those are the findings of the latest KPMG and REC, UK Report on Jobs: South of England survey.

Recruiters, who were surveyed before the unveiling of the Budget, noted a continued and marked decline in new permanent staff appointments for a nineteenth consecutive month with the South of England again showing the most significant reduction among the four monitored English areas.

Demand for both permanent and temporary workers deteriorated rapidly, with rates of decline the most pronounced since the summer of 2020, the report’s authors found.

While the South saw an increase in starting salaries for new permanent hires, the rate of growth remained significantly below the historical average, with only a marginal rise noted in October.

Widespread reports of redundancies led to a greater supply of permanent workers, enabling businesses to be more selective with their offers. Temporary wages saw little change, ticking up only fractionally as an oversupply of temp workers and cost-cutting measures compelled many firms to reduce their hourly wage rates.

Nevertheless, anecdotal evidence suggested that firms were still willing to offer higher pay for candidates with the right skills.

David Williams, office senior partner at KPMG in Bristol, said: “The continued decline in both permanent hires and temporary billings reflects the caution businesses are exercising in the South, which saw the steepest drop in vacancies nationwide last month as firms pulled back on hiring ahead of the Autumn Budget.

“Looking ahead, it’s unlikely that businesses will rush to bring on new teams, with the recent National Insurance rise creating new considerations for employers.

“These factors heighten both the cost and potential risk of hiring, which will likely see companies in the South West re-evaluate their talent needs heading into the new year.”

Neil Carberry, chief executive of REC, the Recruitment & Employment Confederation, said: “These figures are a timely reminder that demand from employers for new staff has weakened since the election – though the overall picture remains resilient by comparison to pre-pandemic.

The downturn in the South was linked to a cooling economic environment and rising uncertainty due to the upcoming Budget, diminished business needs and higher minimum wages.

“But things now stand in the balance – firms need to be persuaded to invest, with recent changes to NI thresholds, the minimum wage and prospective changes to employment law all causing concern.

“Firms will be looking for the Government to deliver a clear, stable growth plan and detailed regulatory changes that enable firms rather than put them off over the next few months.”

Giving a local perspective, Dan Barfoot of CMD Recruitment – which has offices in Devizes, Melksham, Calne, Swindon and Bath – said: “A lot of people held off advertising jobs before the Budget, and employers will now be working out the cost implications to their businesses come April.

“With the cost of employing permanent staff on the rise, we might see a shift towards companies hiring staff on temporary or short-term contracts as and when required.

“The rise to employers’ National Insurance, meanwhile, will force some businesses to find savings elsewhere. Reducing costs will be paramount for businesses to survive.”

Image: Biljana Jovanovic at Pixabay

Latest: South West UK job vacancies fall at fastest rate since pandemic as business confidence slumps