The latest data from the REC’s Report on Jobs shows an interesting picture, with a mixture of challenges and opportunities for recruiters, employers and candidates. Notably, sectors like Engineering and Manufacturing continue to operate in a tight recruitment market, and employer confidence seems solid. Even in sectors where employer confidence has been less certain, there are good signs of improvement. As Neil Carberry, REC Chief Executive says,
“As inflation begins to drop, it is likely that firms will return to the market later in the year – employer surveys suggest confidence may be returning.”
Here we look at the data in more depth and reveal the wider picture in the recruitment arena as we head into the last quarter of 2023.
Numbers placed in new roles have fallen
Broadly, the data revealed a decline in the number of people being placed in new jobs in August, whether that was for permanent or temporary roles. It’s important to remember that there’s always a seasonal drop at this time of year. However, the number of people starting new permanent jobs fell at the fastest pace in over three years. Those getting new temp roles also declined, but this was marginal. What hits the headlines about temporary roles is that this was the first fall in over three years of growth. In light of the wider economic climate, employers have exercised greater caution over hiring of late, but this tends to be sector specific. Engineering, Manufacturing, Accounting, Logistics and some other sectors remain strong.
Candidate supply is increasing
Candidate supply continues to rise quite rapidly, which now represents six months of growth. Surveys report that slower hiring activity combined with some redundancies are causing the swell in candidate numbers. This presents better opportunities for employers who have been operating with depleted candidate pools for far too long. The growth in candidate availability is largely within the temporary sector, although there has been a soft rise in permanent candidate supply. Combined, we are seeing the quickest rate of growth in candidate supply since the 2008-09 global financial crisis – if you exclude the unusual situation of the pandemic.
Vacancies continue to increase, but at slower rates
Data on vacancies is complex. The REC reports that vacancy numbers continue to increase, although the rate of growth has fallen to a two-and-a-half-year low, mostly due to the slowdown in permanent job vacancies. Nonetheless, they reported increased demand for staff in August. There is notably high demand for temporary staff in the private sector. However, data from the Office for National Statistics (ONS) shows that vacancies fell -20.0% year-on-year in the three months to July 2023. However, even the ONS data shows that vacancies remain considerably higher than pre-pandemic levels.
Salaries and wages continue to rise
Both permanent salaries and temporary wages rose again in August. This is a sign of the continued tight market combined with the cost of living situation. There are indications that this salary inflation is beginning to ease somewhat. The sharpest rates of pay growth are still being experienced in the North of England. There has now been consistent wage growth for two-and-a-half years. As always, employers will attract the best candidates with the highest skills when they offer attractive salaries. ONS data shows that annual growth of employee earnings stood at +8.2% in the second quarter of 2023, which (excluding the unusual situation of post-furlough return to work) is the quickest rate of expansion on record.
Take an organisation-centric approach to hiring
Employers may find themselves in the position of looking at decisions about hiring through a concerned lens, due to the wider economic climate. While this is important, the data shows that a much more specific evaluation is needed, taking into account sectors, regions and organisational objectives. This is where organisations benefit from having skilled and experienced recruiters in their camp, helping to determine the best recruitment strategies for their needs at the time.
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