Temporary/contracting billings continued to grow as strongly in February as they did in January, while permanent placements reached a three-month high last month, the latest Report on Jobs from Markit/REC reveals.

Billings for temporary/contracting professionals grew at their fastest pace in six months, but with the availability of staff for both permanent and temporary positions continuing to decline in February, and with major challenges ahead, REC Chief Executive Kevin Green sounded a cautionary note.

Describing the labour market as “at a critical juncture,” Green acknowledged that pay was moving in the right direction and demand for staff remained strong, but the continuing decline in the availability of both contracting and permanent staff was also noteworthy, even though the rate of decline eased in February.

Vacancies in the private sector continued to register a stronger trend than those in the public sector, although the growth in demand for Umbrella Company Employees and other contracting/temporary workers was broad-based, rising across all nine of the temp sectors monitored by the report. The most in-demand temp category was Nursing/Medical/Care.

Green added “The introduction of the National Living Wage on April 1st, closely followed by tax changes on April 6th, will disrupt hiring strategies for many businesses. Employers will seek to offset rising wage bills, for example by scaling back recruitment and increasing automation. This could weaken future demand for staff.

“In June, the EU referendum carries a very real risk that business confidence will be curtailed and investment in hiring could falter. It’s vital that we have an informed debate about the impact the referendum might have on jobs, both in the short and long term. All parties must remember that UK employers need access to the global labour market in order to thrive.”

Referring to global economic headwinds adding to uncertainty in the coming months, Green called upon the Government to “avoid further destabilising the UK jobs market in next week’s Budget.”

Green’s remarks about tax changes on 6th April merit further attention. Should proposals to change tax relief rules on the huge travel and subsistence expenses incurred by contracting professionals proceed, it is difficult to see how the labour market will not be destabilised.

Opposition to the plans is gathering momentum in Parliament, with dozens of MPs signing an open letter to the Chancellor this week calling for a strategic review of the tax system to enable proper recognition of contracting professionals, who do not fit in either of the two categories currently recognised by HMRC: employed or self-employed.

The letter was sponsored by Umbrella Company trade body PRISM, whose CEO, Crawford Temple, thanked all the signatories.

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