Brexit brings biggest hit to permanent work placements in seven years

In a blow to Scotland’s labour market, 37 per cent of recruitment consultancies recorded declines in the number of people being given permanent positions - the most marked for seven years.

July was also the second month in a row permanent placements fell, the monthly jobs report from the Recruitment and Employment Confederation (REC) found, and the third since March 2013.

The survey, which involved 100 consultants, found the fall in permanent appointments contrasted with a modest rise in temporary placements.

REC chief executive Kevin Green said the figures reflect the “dramatic freefall” seen in the UK labour market during July, citing economic turbulence caused by the June vote to leave the European Union as the “root cause”.

But the figures also show a slight rise in demand for permanent staff in Scotland - greater than across the UK as a whole - particularly in IT and engineering and construction.

There was also a larger demand for temporary workers in engineering and construction as well as in nursing, medical and care.

Permanent candidate availability continued to deteriorate across Scotland during July. However, the availability of candidates for temporary vacancies increased for the second month running and the greatest extent since February 2012.

Mr Green said: “The UK jobs market suffered a dramatic freefall in July, with permanent hiring dropping to levels not seen since the recession of 2009.

“Demand for staff remains strong with vacancies continuing to rise, but the sharp fall in placements suggests that businesses are highly cautious about committing to new hires.

“Economic turbulence following the vote to leave the EU is undoubtedly the root cause. The record-high employment rate and ongoing skill shortages have made it difficult for employers to find suitable candidates for the roles available in the past, and this remains the case.

“We’re now seeing the added problem of individuals deciding to stay put rather than change jobs in the current environment.

“While there are worrying signs, it’s important we don’t jump to conclusions from one month’s data.

“The truth is we don’t know what long-term consequences the referendum result will have on UK jobs; with the political situation becoming more stable and the Bank of England making sensible decisions, we may well see confidence return to the jobs market more quickly than anticipated.”