Demand for labor in Britain collapsed last month after the new Labor government's first budget, a survey showed on Monday, adding to other signs of the impact of labor increases. taxes on employers.
Trade body Recruitment and Employment Confederation and accountancy firm KPMG said their personnel demand index fell to 43.9, the lowest figure since August 2020, from 46.1 in october.
Only the COVID-19 pandemic, the global financial crisis and the immediate aftermath of the September 11 attacks in the United States resulted in more unfavorable results.
Permanent staff placements fell in November at the fastest rate since August 2023, although the pace of decline for temporary workers slowed slightly compared to October, according to REC.
“No one will be surprised to learn that businesses took the time to reassess their recruitment needs in November, after a difficult budget for employers,” said Neil Carberry, chief executive of the REC.
“The real question now is whether businesses will return to the market as they enter next year with greater certainty about the path forward.
Last week, the REC issued an “urgent warning” over the government's separate Employment Rights Bill, which aims to reform the jobs market and improve living standards, describing it as “poorly put together”.
Finance Minister Rachel Reeves, who announced her budget on October 30, hopes Monday's survey represents a one-off drop rather than the start of a longer slowdown in the jobs market.
The REC survey is a diffusion index which can be subject to sudden but brief movements during major political and financial events.
-But employers said business tax hikes will have a deeper impact.
Last week, the Confederation of British Industry cut its estimate of economic growth for next year due to rising social security contributions, although other forecasters, such as the OECD, said other budget measures would increase growth.
A Bank of England survey showed 54% of businesses said they would respond to budget-related cost increases by cutting employment, while 38% expected pay to fall.
Separately, a survey by research firm Incomes Data Research showed that the median pay deal offered by private sector employers fell to 3.9% in the three months to October, from 4.0% previously.
The BoE is monitoring signs of easing inflationary pressure in the labor market.
Mr Reeves described the budget as an exceptional measure intended to restore public finances and finance improvements to public services. He promised businesses a stable and predictable tax policy to help them plan and invest.
Jon Holt, managing director of KPMG UK, said interest rate cuts planned for 2025 and the government's investment plans offered reasons for optimism.
“This should give more confidence to businesses, which could help stabilize the labor market,” Mr Holt said.
