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Hiring of temporary workers rises as employers battle uncertainty ahead of the Brexit vote

Hiring of temporary staff throughout March increases at faster pace than previous months

According to the latest monthly report by Markit and the Recruitment and Employment Federation, British companies were hiring permanent workers at a slow pace throughout March as they await the results of June’s referendum on the UK’s EU membership.  Meanwhile, the placing of temporary staff increased at its fastest pace in four months.

Recruiting firms said that while the demand for staff from employers for both temporary and permanent workers continued to grow, the pace of expansion was the slowest since June 2013.

According to the report, some sectors continued to suffer from a shortage of skilled workers, especially nurses, chefs, teachers, security guards as well as accountants, engineers and receptionists.

Tom Hadley, REC director of policy, said. ‘While we expect jobs growth to continue overall, we are now seeing the effects of current uncertainty in the marketplace on UK employment.’

‘Global economic headwinds plus uncertainty around a possible Brexit make it likely that slower growth in permanent hiring will remain over the next few months as employers take a wait-and-see approach.’

‘In contrast, temporary hiring is on the up as businesses seek to meet increasing demand while retaining the ability to react quickly to any threats that might be around the corner.’

Starting salaries saw an increase during March, probably linked to the imminent introduction of a new, higher minimum wage.  As of April 1 2016, all workers over the age of 25 are to be paid at least £7.20 per hour, a rise of 50p.

However, pay for those already in employment seemed to be held back by low inflation, restraining overall wage growth in the economy.  Bank of England Governor, Mark Carney suggested that since wage growth has been ‘weaker than anticipated’, interest rates would stay at their historic low of 0.5 per cent well into 2017.

However, weekly earnings including bonuses grew by 2.1 percent in the three months to January compared to the same time last year – an improvement from the previous three month’s 1.9 per cent increase but still well below pre-crisis levels.

The slowdown in recruitment of permanent staff comes as data showed growth in Britain’s dominant services sector slumped to its slowest since the beginning of 2013 last month.

According to Markit/CIPS services Purchasing Managers Indes, employment in Britain’s dominant services sector  continued to rise, but at a rate little-changed from February’s recent low.

Figures within the sectors of manufacturing and construction were also disappointing.  Markit chief economist Chris Williamson said that across all three main sectors of the economy, firms reported the smallest increase in demand for just over three years, which in turn led to a reluctance to take on new staff.

‘March saw the weakest rate of job creation for over two-and-a-half years’, he said.

‘Business confidence remains in the doldrums as concerns about the global economy continue to be exacerbated by uncertainty at home, with nerves unsettled by issues such as Brexit and the prospect of further government spending cuts announced in the Budget.’

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