The number of permanent jobs filled by UK recruitment consultants has declined at the fastest rate since August 2023.
In the latest Recruitment and Employement Confederation/KPMG labour market report, many respondents stated that the Budgetlate October led to a new assessment of client staffing requirements. The fifth consecutive decline in billings for temporary staff was due to similar factors.
The latest data shows that the average weekly earnings in the UK grew on an annualized basis by 4.3% in September. This was an increase from the 3.9% recorded in August, and it marked a new three-month record. The acceleration in earnings growth was largely due to the public sector. The latest data revealed that earnings in the public sector were up 3.5% compared to a year earlier. This was a significant increase from the 0.1% that had been recorded in August, when 2023 special payments made to NHS staff and civil servants were removed from annual comparisons. The private sector’s earnings growth fell to 4.5% from 4.8%, the lowest in 3.5 years.
The overall salary growth was limited in November by the reduced demand for permanent staff salary increases. It was also little different from October’s low of 44 months.
The number of vacancies declined sharply and rapidly in November. The latest decline in demand for staff was the biggest in over four years. It was the thirteenth consecutive month that a drop in demand was recorded. Permanent workers saw the most dramatic drop in demand. Recruitment consultants reported a steep rise in the overall availability of staff for three months of November, despite reports of an increasing number of redundancies among clients.
The number of temporary workers declined for the fifth consecutive month in November. However, this decline was less than in September and in October.
Jon Holt said that the figures reflect initial reactions to the Budget. “Businesses have to weigh the prospect of increased employee costs after the Budget. This has led to a accelerated slowdown across the board in hiring activity.”
Holt said that this slowdown could be accompanied by a greater availability of candidates on the market. This would put downward pressure on wage growth, which was largely unchanged from last month’s low.
He added that “this trend will be encouraging to the Bank’s Monetary Policy Committee ahead of its next meeting this month. However, it may not enough to counter the wider inflationary pressures in the economy.”
Holt stated that the prospect of future rate cuts up to 2025 and the government’s plans for investment both point towards improved growth in near-term. This could help to boost confidence in the business community and stabilize the labour market.
Neil Carberry said, “The decline in vacancies led by permanent positions within the private sector, and slower billings for permanent recruitment across the month reflected this trend.” Now the real question is whether companies will be more confident about their future as they enter the new year. “The resilience of temporary employment offers some hope.”
Carberry said that it was important for policymakers to ensure new regulations did not weaken the UK’s flexible job market. Carberry said that it was important to ensure that the Employment Rights Bill rules were tailored to protect temporary and agency work.
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