Economic uncertainty is the colour being painted on 2023’s canvas and will explain, predict and shape the jobs market for the coming months. The unpredictability in the last quarter of 2022 set the scene and it is valuable to review December’s recruitment data from the REC’s Report on Jobs in order to understand the context of what’s to come. The last quarter of 2022 saw the UK’s first double-digit inflation in 40 years and it understandably made employers quite wary in the lead up to Christmas.
However, it’s important to remember that the unpredictability and uncertainty has been taking place in a tight labour market. Candidate shortages make it so. Unemployment rates are incredibly low.
So, let’s take a look at what December’s data revealed.
The number of permanent placements is falling faster
December was the third month in a row that the number of people moving into new permanent jobs fell. The rate of this reduction is the most intense seen since January 2021 (third lockdown). It’s important to remember that the number of people being placed is still rising, but it is softening significantly.
Employers turn to temporary staff
However, as is expected, employers are turning to temporary staff, as they often do at times of uncertainty. We have now seen 29 consecutive months of increases in temporary staffing numbers. Indeed, the rate of expansion was highest in December across the fourth quarter. Nonetheless, it was still weaker than the series average.
The number of vacancies is dropping
As employers reconsider hiring plans, it’s no surprise that vacancy numbers are dropping. REC data shows that vacancy growth remains on an upward trend, albeit at a softer rate. This is likely pushed up by demand for temporary staff, particularly in the private sector. As such, the Office for National Statistics (ONS) reported a fall in the overall number of vacancies in the three months to November, with open positions then sitting at 1,187,000. This is 65,000 fewer than the previous three months. This is now the lowest since September 2021. It’s important to pay attention to context though: vacancies are still at a historically high level.
Candidate supply is still a concern
The fall in candidate supply in December was the softest seen since March 2021. Candidates are understandably cautious and this, combined with a tight labour market, weakens supply. However, this softened, hinting that perhaps things will become easier in this regard.
Starting pay continues to increase, but not so fast
Cautious employers will be glad to know that while starting pay inflation continues, the upward trend is softening, hitting the lowest rates since April 2021. Staff scarcity, inflation and cost of living concerns will continue to push starting salaries and temporary wages up. In the North of England, we have seen a particularly sharp increase in temporary wages.
As Neil Carberry, Chief Executive of the REC says,
“The big test of the labour market will come this month. But overall activity levels remain high, with vacancies and starting rates of pay still growing.”
The months ahead will be interesting.
At times like this, it is the confident and determined employers that will win out. Those who are prepared to find and secure skilled candidates are those who will thrive throughout the recession and beyond.
At First Executive Recruitment and F1rst Commercial Recruitment we are here to meet your staffing needs, whatever the data says. Get in touch on 0161 359 3111.
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