Recruitment firms say there are reasons to be optimistic about 2025, despite the steep decline in vacancies.

According to newly released statistics, the decline in permanent employment placements at the end of 2024 was the largest since August 2023.

The KPMG and Recruitment and Employers Confederation survey for December 2020 reported a lack in market demand for qualified candidates. This could be linked with fears about the increase in employee National Insurance contributions starting April 2025.

Neil Carberry is the chief executive of REC. He says that December, even in good times, was a bad month for recruiting. However, he believes there are reasons to be optimistic about 2025, given the economic trends.

Office for National Statistics figures confirm the findings. They show that UK vacancy rates continued to decline in the three-month period to November. The number of UK vacancies dropped by 10,000 from October to 818, the lowest level since May 2021.

In spite of this, it was clear that the salaries of permanent employees had increased significantly in December. Pay rates for temporary staff increased more modestly.

The decline in permanent staffing was the most severe since August 2020. London saw a smaller decline than other parts of the UK.

Recruitment consultants reported a further sharp increase in the availability of staff during December. The overall expansion of availability is the largest since June. The growth surge was driven primarily by permanent staff, but temp workers were also in high demand at the end 2024.

The Midlands defied the market trend and registered a modest increase in temp billings. All other English regions experienced a decline.

Both the private and public sectors were affected by this decline in demand. The steepest rate of contraction was seen for executive/professional positions followed by those in IT.

The average earnings growth rate in the UK increased to 5.2% annually during October. This was an increase from the 4.4% recorded in September, and is the highest since May 2024. In October, both the public and private sectors saw their earnings rise faster than they had in September. The private sector saw earnings rise to 5.4% from 4.6%, a five-month record.

Earnings for public sector workers increased by 4.2% annually, a record high of five months and a significant increase from the 3.5% in September.

Jon Holt (group chief executive of KPMG and UK senior partner) warned that hiring could continue to show caution in the near-term as businesses take stock of rising employment costs, an interest rate cut more gradually and increasing inflation.

He added that “however,” as 2025 approaches and the UK’s economic growth accelerates, businesses will require new talent. The fact that the salary inflation is at its highest in four months indicates they’re still willing to compete.

Holt said that chief executives would be relying on new policies to support their growth ambitions for 2025 and boost investment confidence.

Neil Carberry is the chief executive of REC. The report highlights a “weakness” in businesses, as they make changes to cut costs following a difficult Budget. He added that the month of December is always a low-hiring period, but businesses should remain optimistic because inflation has been brought under control and unemployment is low.

He said, “The basics are better than most people realize.”

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