UK businesses cut hiring for permanent staff amid Brexit uncertainty

08 April 2016

Hiring of permanent staff via UK recruitment firms rose at its slowest pace in six months in March, with the growing employer unease over the UK approaching EU referendum, according to a survey today.

Companies preferred to hire temporary staff at the fastest rate since November, according to the latest monthly report from the Recruitment and Employment Confederation. According to the body, uncertainty was starting to affect the labour market.

"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," Reuters quoted REC director of policy Tom Hadley.

"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."

Growth in starting salaries for both permanent and temporary staff was up for a second month during March, which the REC linked to the imminent introduction of a new, higher minimum wage.

In February, the Bank of England revised downward its forecast of UK wage growth, which governor Mark Carney named as a key determining factor of future interest rates in a speech, at the start of the year.

The REC's findings echoed other business surveys that suggested that, with opinion polls tight, companies were delaying hiring and investment decisions until after the 23 June vote on the UK's membership of the EU.

Hadley said, ''While we expect jobs growth to continue overall, we are now seeing the effects of current uncertainty in the marketplace on UK employment, reported.

The news of a slowdown in permanent recruitment comes after a separate report this week that pointed to the UK's services sector almost coming to a standstill last month as companies considered a combination of risks, including the looming possibility of the UK's  exit from the EU.

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