Vacant Expressions

Falling demand for workers as the recession bites is leading to a steep decline in the number of job vacancies according to a fresh report from the Recruitment and Employment Confederation.

“Labour market conditions continued to deteriorate as the poor economic climate and reduced company activity levels led to another substantial decline in demand for staff.”

The report also hints that businesses are looking to replace senior staff with cheaper younger workers in a drive to cut labour costs – but that many people approaching retirement are having second thoughts because of the dramatic decline in the value of stock prices and the knock-on effects on the value of pension funds.

My own chart tracks the three month rolling average number of unfilled vacancies in the UK economy. Keep in mind that many of the available jobs are not notified to the employment agencies – but the trend is clear the seasonally adjusted figure of unfilled vacancies has collapsed from 675,000 in the spring of 2008 to just over 500,000 at the start of 2009.

We are also starting to see evidence of another feature of a weakening labour market – a contraction in the number of hours worked. To judge from previous recessions, the cull on hours has only just started – overtime payments are normally more expensive than standard hours and these are frequently the first to be hit.

Cutting back hours, pay freezes, shorter working weeks, temporary plant closures, non-replacement of retiring staff, even greater flexibility in short term contracts – these are just some of the options available to businesses who must adjust to weaker demand and great pressure to conserve cash in a deepening downturn.