UK companies are starting to take on staff again, suggesting that an improving economic backdrop is encouraging firms to bring in new skills where they are most needed.
SMEs are most confident about future prospects, coming at a time when the government has announced an initiative to boost long-term lending for small businesses.
According to a report on jobs produced by the Recruitment Employment Confederation (REC) and KPMG, the rate of decline in permanent hires eased in August, halting a trend of several months.
Similarly, temporary and contract staffing witnessed a rise in placements for the first time in nine months.
If this trend continues it suggests that demand for staff is beginning to increase without companies necessarily having the flexibility to take staff on a permanent basis. It may also point to a ‘wait and see’ attitude among employers.
“With question marks still hanging over the long-term state of the economy, it would be easy to suggest that an upward curve in the jobs market is nothing more than a blip,” said Bernard Brown, partner and head of business services at KPMG. “But the truth is that, in some parts of the country, we are actually seeing a growth in the number of companies recruiting and where there is a decline it is now virtually insignificant.”
For once, London and the South East is not the driver of growth. The strongest geographical expansion came in the Midlands, which took the biggest share of both permanent and temporary hires.
Previous research published in August by the Chartered Institute of Personnel and Development (CIPD) found that one in three firms were keeping on more staff than they needed to avoid losing valuable skills, but anticipated making redundancies if economic growth did not take place within the next year.
The mood of confidence among SMEs has been lifted by government announcements of financial support to the sector. Business Secretary, Vince Cable, last week announced the formation of a business bank, for the purpose of making lending available to SMEs who are struggling to access credit.
The government initiative will provide funding of £1bn via existing lenders with government support acting in the form of guarantees and equity. It is anticipated that the assistance will ease the way for lending where high street banks are reluctant to take risks on businesses.
There are 4.5 million small businesses in the UK, which account for 59% percent of private sector employment — estimated at 13.8 million people.