As KPMG and the Recruitment & Employment Confederation release their latest comprehensive guide to the UK labour market, we summarise the topline takeaways from the report.
Permanent placements fall at quickest rate since June 2020
Upturn in candidate availability gathers pace
Pay pressures ease only slightly amid rising cost of living
The latest figures for July showed that while candidate availability continued to improve, permanent placements fell at their quickest rate since June 2020. There was a slowdown in recruitment overall, following a number of recent redundancy announcements and hiring freezes, meaning the upturn in labour supply was the sharpest recorded since 2009, excluding that seen during the pandemic.
Meanwhile, the report also found growth in temporary billings also slowed in July compared to the month previous, with the rate in fact the slowest recorded since October 2022.
Salary inflation was lower in July due to a weaker economic climate and higher availability of candidates, but still marked overall as organisations were in competition for skilled candidates and awarded salary increases to help employees amidst the cost of living crisis.
Overall, the number of available roles increased at the slowest pace for 29 months, with a decline in permanent placements showing up in all four English regions monitored by the report. Additionally, temp billings rose in London and the Midlands, but fell in the north and south of England.
In the private sector there was slightly higher demand for staff, with the strongest overall upturn in vacancies for temporary roles. Meanwhile, short-term and permanent roles in the public sector rose slower.
Seasonal working trends meant demand for temporary hotel and catering staff was steeper than other sectors, while blue-collar jobs topped the permanent market.
Here’s what the experts had to say
Claire Warnes, Partner in Skills and Productivity at KPMG UK, said recruiters were not yet confident enough in the economic outlook to commit to permanent hires.
“The latest survey results reflect the current summer weather – damp, but with some possible bright skies on the horizon. Businesses are also still freezing hiring, with some redundancies, which led to the sharpest upturn in labour supply since December 2020. This is good news for recruiters who have an even larger pool of candidates to place, but with the number of vacancies available increasing at the slowest pace for nearly two and a half years, supply and demand are once again off balance.
“To rebalance the labour market and aid economic recovery, more focus on reversing the deepening skills gap would be a step in the right direction.”
Neil Carberry, REC chief executive, added: “The jobs market overall remains fairly robust, with vacancies and pay still rising and unemployment low but there is a sense in today’s report that the economy will need some growth soon to sustain this positive picture.”
Employers turning to temporary staff in uncertain times showed how delicate confidence levels were in the economy, he said. “Temping keeps people in work when firms are uncertain about the future path of the economy – it is a huge UK success story… But today’s report emphasises again that sustained positivity in our labour market rests on economic growth and investment in the UK.”