New figures released after Rachel Reeves’ tax hike for employers have suggested a slump in hiring activity, as businesses remain “concerned by the volatility of the immediate outlook, especially as employment costs rise”. The latest pulse check of London’s jobs market showed that taking people on for permanent roles across the capital is at its lowest point since the start of the year, and behind the equivalent UK-wide reading, experts said. Vacancies for temporary and permanent roles were also down in May. Job placements “fell sharply” – according to data published by KPMG and the Recruitment and Employment Confederation (REC), supported by BusinessLDN, as the impact of April’s increase in employer national insurance contributions and an uncertain global trading environment hit hiring.
The measure for permanent placements in the city stood at 43.7 in May—any figure above 50 indicates expansion, while any figure below suggests contraction. It marks the lowest reading for indefinite hires across London since January (42.9), with activity in the capital lower than in the UK as a whole (44.2).
Meanwhile, the reading for temporary billings in London (49.6) has been in negative territory for 17 months.
Business London also noted that, as hiring slowed, permanent staff availability (60.6) and temporary staff availability (63.0) have both increased.
However, despite the labour market continuing to cool and staff availability increasing, pay growth for new starters in permanent roles increased to 56.9 in May.
In addition, rates for temporary placements also increased (52.8). Specialists say this may have been driven by robust demand for specialist roles in fast-growing sectors.
Neil Carberry, Chief Executive at the Recruitment and Employment Confederation, said: “Businesses remain cautious. Despite stronger long-term intentions, they are concerned by the volatility of the immediate outlook, especially as employment costs rise.
“As employers adjust to this Spring’s tax rises, that could change.
“This is exactly why clear, supportive sounds and signals from Government and local authorities are so important to unlocking confidence.
“London often feels economic headwinds affecting hiring earlier than other regions, given its exposure to global sectors such as finance, tech, and consultancy, but it is also the place that responds fastest when growth is on the horizon.”
Muniya Barua, Deputy Chief Executive at BusinessLDN, said: “Rising employment costs and global uncertainty have seen firms hit the brakes on hiring.
“The Government should reassure businesses that it won’t bear the brunt of any future tax rises.
Accelerating delivery of shovel-ready projects such as the DLR extension to Thamesmead would also go some way towards tackling London’s housing crisis and boosting growth.”