(July 14): Hiring by UK businesses plunged at the fastest pace in nearly two years, according to a survey that suggested that the fallout from a hike in payroll taxes is showing little sign of letting up.
Permanent staff appointments fell by the most in 22 months in June and the number of available workers jumped, a monthly report by KPMG and the Recruitment and Employment Confederation (REC) showed.
The survey of recruitment firms and employers pointed to the labour market continuing to cool after Chancellor of the Exchequer Rachel Reeves pushed through a £26 billion (RM149.03 billion) increase in employers’ national insurance and a hike in the minimum wage.
Official tax data suggest that employment has fallen sharply since the changes came into effect in April. It shows that the number of employees on payrolls has plunged by over a quarter of a million since Labour’s first budget in October.
“Much of that hesitation stems from the scar tissue left by the Spring tax hikes and fear of further business tax rises,” said Neil Carberry, REC chief executive. “There is more volatility month by month in the jobs market right now, as employers assess a complex picture and hire when they need to.”
The report said the supply of candidates rose at the quickest rate since 2020 and growth in permanent salaries eased to a four-month low. Vacancies continued to fall with the retail sector suffering the biggest decline in permanent job postings.
Waning demand for workers is likely to feed into the Bank of England’s thinking as it considers whether to stick to its once-a-quarter pace to rate cuts. Traders put the odds of another quarter-point reduction at the Monetary Policy Committee’s meeting next month at over 80%.
The rate-setters have been concerned about elevated wage growth and services inflation, fuelled by what had been a historically tight labour market. Both measures are now on the decline as demand for staff is curbed by higher employment costs and a tepid economy.
– The Edge
