Clear signals that the labour market is now really cooling down
The signals that the labour market in the Netherlands is cooling down have become clearer in the first quarter of 2019. The latest figures from our Dutch Labour Market Survey from the first quarter of 2019 show that the number of issued permanent contracts is again declining. For example, 36% of new employees received a permanent contract, compared to 43% in the previous quarter. The number of temporary contracts is increasing.
The sourcing pressure decreases by 1.7%.
In addition to the decrease in the number of permanent contracts, we also see another striking development in the labour market, which indicates a possible cooling down. The sourcing pressure has decreased by 1.7 percent compared to the previous quarter. Sourcing pressure is the most important predictor of scarcity in the labour market. This figure has only increased in recent quarters, and has now fallen again for the first time. The frequency with which candidates are approached by recruiters is also stagnating. For about four years, the approach frequency increased, but has remained at 49.8% in recent quarters. This means that half of the working population is approached for a job once or several times a year.
In addition to the figures that indicate stagnation, there is also good news. The expected search time for a new job is still decreasing (since Q2 2013) and is in line with the falling unemployment rate: from 3.9 to 3.8 months. In addition, the prospect of a permanent contract for flex workers at the end of their contract is still favourable.
Based on our own forecasting model, we expect the number of vacancies to fall sharply in 2019 compared to 2018. This is in line with the cooling economy.
Cooling of the Dutch economy
At the end of last year we already saw several indicators that the economy might turn around, including a decrease in the number of hours worked in temporary jobs, a decrease in consumer confidence and a decrease in the number of expected new employees. CPB's growth forecast for the economy in 2019 was still positive at 2.6% at the end of last year, but this year it was significantly revised downwards to 1.5%. The forecast in our own model is now 1.7% for 2019.
These are the latest figures of the indicators for the cooling of the economy:
- Consumer confidence is declining (from +25 in April 2018 to -3 in April 2019).
- Producer confidence fluctuates somewhat, but shows a downward trend (from +8.2 in April 2018 to +6.7 in April 2019).
- The number of hours worked in temp jobs has been shrinking for six months (-5.3% in the period 2019-03 compared to +6.4% in 2018-03).
- The share price (AEX) fell sharply at the end of last year, but has since risen again. Nevertheless, the trend over the past year has been slightly downward.
- The CBS vacancy indicator has been declining for 13 consecutive months. The sub-indicator for industry in particular has seen a spectacular decline.
"Cooling down in the labour market does not mean an end to scarcity and shortages. The number of vacancies remains unprecedentedly high. However, we do see that both employers and employees are creeping in with uncertainty. We can see this in the decrease in the number of permanent contracts and the sourcing pressure. At the same time, it remains a busy employee market, in which employees still frequently have the opportunity to choose from vacancies. The scarcity remains and increasing uncertainty on average means that employers have to work even harder to attract talent", says Gijs de Haas van Dorsser, Managing Director Intelligence Group.
More insights into labour market data?
The above data comes from the European labour market research by Intelligence Group: the Global Talent Acquisition Monitor (GTAM). This survey was conducted among 60,000 unique respondents. The data from GTAM are available online in the European Recruitment Dashboard, which also contains data from Textkernel's Jobfeed.
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