The latest REC/KPMG Report on Jobs makes for unsettling reading for PAYE umbrella contractors seeking new placements.  The report, which is the most comprehensive guide to the UK labour market, reveals that the slow but steady growth in both temporary and permanent appointments seen over the last seven months hit a five-month low in May.  Pay rates for temporary and permanent staff also grew more feebly than for several months.

Commenting on the figures, REC Chief Executive Kevin Green said that they reveal a “worrying deceleration” in the UK jobs market.  Although private sector job creation hasn’t “hit the buffers” it does clearly appear to be slowing, Mr Green added, which raises renewed concerns about whether continuing public sector job losses can be absorbed.  While some sectors have seen increased employer confidence, he continued, “… economic growth remains too weak to spark the real step-change that our jobs market needs.” Many people who under more normal circumstances would be looking for new posts are deciding to stay put.

The survey also reveals a paradox: despite the anaemic growth in the jobs market, a number of sectors have wanted to recruit but have nonetheless struggled to find suitably skilled candidates.  Unless the government’s new “Work Programme” can equip candidates with the necessary training and guidance, the mismatch between vacancies and available skills could hinder future growth, Mr Green warned.

On a more positive note, contractors working through umbrella companies look set to benefit from improved relations between recruitment agencies and end clients.  A recent REC poll shows that 93 per cent of hirers declared themselves “very satisfied” with the performance of their agency in May, with recruiters consistently finding the most suitable contractors for their clients.

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