The subdued picture in the jobs market that characterised the start of the year continued into February, as expected. However, the overall picture is one of resilience with the landscape looking more robust than in previous times of economic uncertainty.
Here we unpick the data in the latest KPMG and REC Report on Jobs to bring you the headline facts.
Cautiousness is reflected in hiring decisions
It’s unsurprising that in the climate of economic uncertainty, employers are continuing to hold fire to some degree with their hiring plans. New recruits being placed into permanent roles has continued to decline, a characteristic we see when employer confidence dips and hiring freezes come into play. We’ve now seen seventeen months of reductions. However, within this, a sizeable 26% of recruiters have actually seen an increase in the number of people being placed in new jobs. It’s also worth noting that the downturn in the North of England is considerably softer than elsewhere.
The UK is renowned for its ability to flex in such climates by shifting to the use of temporary workers. The volume of temps has been notable for quite some time. However, while employers continue to turn to temps, there are signs this is easing due to tight employer budgets. Many employers are waiting for anticipated interest rate reductions so that they can make investment decisions.
Employers take a breath from sharp salary inflation
While the latest data reveals that we’re still witnessing marked increases in starting pay for permanent workers and temporary worker wages, the foot is coming off the accelerator. In recent months, salary inflation has been sharp, especially for highly-skilled candidates. That’s now eased off and February’s data reveals the slowest recorded rate of salary inflation for nearly three years. Salaries and temporary wages are still going up, but not as sharply and are definitely showing more signs of stabilising.
Demand for staff is easing off
In recent years, a tight labour market, where demand has outstripped supply, has made things difficult for employers. This picture is changing. There was a solid and faster rate of reduction in demand for staff last month. Interestingly, the rate of contraction was the fastest since early 2021. For the first time in three-and-a-half years the number of temporary job opportunities fell too.
It’s vital to look closely at region, sector and industry in terms of demand for workers. The private sector continues to have higher demand for staff than the public sector, and there’s considerable demand for staff in industries such as engineering, for example.
Candidate pools give employers excellent choice
Candidate supply has been increasing at a rapid pace for the last year. However, while candidate supply continues to grow, it’s now doing so at a slower pace than in the last four months. Many candidates seem to be considering temporary work, which is what we’d expect in the current climate. The softest rise in temporary candidate availability is happening in the North of England.
Commenting on the latest survey results, Jon Holt, Chief Executive and Senior Partner of KPMG in the UK, said:
“The impasse between economic uncertainty and hiring decisions continued into February. Chief Executives tell me they are ready to invest and grow – including taking on new staff – yet the reality is they’re being held back by the prospect of weak demand.”
It’s likely that uncertainty will remain until post-election and until greater economic confidence returns. However, there are excellent opportunities still available for both employers and candidates.
You need the right partner in your corner to take advantage of them. We are here to help you do just that. Get in touch on 0161 359 3111.
We publish an overview of the REC/KPMG Jobs Outlook Report each month to keep you up to date with the UK recruitment and jobs market month by month.
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