As we embark on 2024, reflecting on the end-of-year data for the jobs market provides insight into the trends that will help shape hiring decisions. While the economic climate was charged and uncertain in 2023, creating ripples of concern, the UK jobs market has proven strong and resilient. It’s a similar picture as we head into 2024.
Neil Carberry, REC Chief Executive, said,
“The slowdown in our labour market seems to be easing a bit. Given that December is a time when employers generally postpone activity into the new year, this is a positive sign that the labour market is weathering the current economic storm.”
Here we look at the latest data from the latest KPMG and REC Report on Jobs to share the trends and information you need to know.
The downturn in hiring eased in December
In an uncertain and weaker economic climate, the trend has been for hiring activity to slow. This is as expected. However, at the end of 2023, hiring managers seemed somewhat more confident, with both permanent and temporary jobs falling at a softer rate than we saw in November.
As is typical when hiring managers are unsure, there are more significant falls in the number of permanent roles being hired for than temporary ones. This means we’ve now seen 15 consecutive months of falls in those being placed in permanent jobs. Nonetheless, the rate of decline has definitely softened. For temporary placements, we’ve had just two successive months of declines.
However, as we have noted in our previous reports, there’s quite a difference when we dive into regional data. For example, the North of England is reporting higher numbers of temps being used and hasn’t experienced declines like in the South of England.
Starting pay increases pick up once more
Starting salary inflation has been an ongoing trend for a long time now, but it had been easing. It appears that broadly, the intense rises are still easing, but not to the same degree as in November. While December’s increase in starting salary inflation was the second slowest since March 2021, it was still sharp. It’s a similar picture for temporary wages. The Office for National Statistics (ONS) reports that total employee earnings rose +7.2% year-on-year over the three months to October 2023.
Starting salaries and temporary wages are pushed up by competition for the best staff and candidate demand due to the Cost of Living Crisis.
Candidate supply issues continue to ease
With wider economic uncertainty we’ve seen an increase in the number of redundancies and a slowdown in widespread hiring. As such, the previously tight candidate pools are easing somewhat with greater choice for employers. There have now been ten months characterised by easing candidate supply. On the back of difficult times finding candidates, this is welcome news for many employers.
However, again we need to look closely at regional data here. The North of England has bucked the trend and has experienced a small drop in candidate supply of permanent workers.
Vacancy numbers have dipped slightly
We expected a subdued end to 2023 and that’s what the data confirms. The total number of vacancies fell for the third time. However, it’s really important to note that this drop is only marginal and there is very little change from November. Demand for temporary workers continues to grow slightly, especially in the private sector.
It’s also important to use a wide lens when looking at vacancy numbers. Despite the dip, data from the ONS shows that vacancies are still 123,000 higher than just prior to the pandemic.
Again, we need to take a closer look at the data too. For example, engineering, as well as accounting and financial, have both seen increases in the demand for permanent staff. There is also growing demand for temporary staff in engineering, secretarial and clerical, and accounting and financial.
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