The UK jobs market saw mixed results in the latest KPMG and REC, Report on Jobst, with a continued decline in permanent placements, but a rise in temp roles. However, there is positive news on the horizon as vacancy growth has improved for the second month in a row. Furthermore, the reduction in candidate supply has softened, giving hope for a more stable job market in the near future. These findings provide valuable insights into the current state of the UK job market and will be useful for employers, job seekers, and policymakers alike.

Let’s take a look at the main report findings.

· Sustained decline in permanent placements

According to UK recruitment consultancies, permanent staff appointments continued to decline for the fifth consecutive month in February, at a slightly faster pace than in January. Economic uncertainty has made clients more cautious about hiring staff. However, the numbers for temporary workers slightly increased. While the overall trend is downward, the North of England saw a slight improvement in permanent placements. The report suggests that the UK job market is still facing challenges due to the ongoing effects of the pandemic and economic uncertainty.

· We’re relying on temporary staff to weather uncertainty

In February, there was a 31-month consecutive expansion in numbers for short-term staff, according to the Temporary Numbers Index adjusted for seasonal factors. Recruiters noted that the increase in temp numbers was due to greater demand for temporary workers compared to permanent staff.

However, the growth rate slowed down compared to the beginning of the year and was only mild, as some panel members mentioned subdued demand for staff and a shortage of candidates. The North of England had the highest increase in temporary numbers in February. This report highlights the increasing importance of temporary staff in the UK job market.

· Vacancy growth continues its upwards trend

The UK job market saw a four-month high in overall vacancy growth, but it remained softer than the average in over 25 years, according to a recent survey.

The increase in vacancies was driven by a sharper expansion in demand for permanent workers while temp vacancy growth softened slightly. Meanwhile, the ONS reported a decline in overall vacancies in the three months to January, with 1,134,000 open roles, the lowest since September 2021. However, the figure was almost 38% higher than before the pandemic.

· Softest fall in candidate supply in two years

The latest survey showed that the decline in candidate supply continued to ease, with the overall staff supply falling at a slower pace than in January. The fall was due to the reluctance of workers to seek new roles amid market uncertainty and skill shortages. The availability of permanent staff remained on a downward trend for 25 months, but the rate of contraction was the slowest since March 2021.

· Starting pay continues its sharp upward trend

Starting pay for both permanent and temporary roles continued to rise sharply due to difficulties attracting skilled staff and rising cost of living. However, the rate of growth was the second-softest for nearly two years. The North of England recorded the highest increase in starting salaries. The rise in hourly rates of pay for short-term staff softened from January, though it was still sharp.

It’s also worth noting that February’s Report on Jobs contained a special feature containing some valuable insights including:

• Office for National Statistics data showed a record-high net flow out of economic inactivity in Q3-Q4 2022, with 62% of new workforce entrants coming from inactivity, which is positive for the UK labour market.
• Zero hours contracts hit record high at 1.13 million in Q4 2022, up 9.6% from the same point in 2021, highlighting the significance of flexible workers.

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