Claire Warnes, Partner, Skills and Productivity at KPMG UK, is quoted at the start of the most recent REC Report on Jobs as saying,
The latest survey results reflect the current Summer weather – damp, but with some possible bright skies on the horizon.
And that’s a good summary of the data within. There aren’t dreadful storms, just a subdued set of data relative to previous months, and there are strong glimmers of potential, not least because of rising business and employer confidence.
Let’s take a look at what the updated data reveals:
Decline in putting new recruits in place
The number of people starting new permanent or temporary jobs has been declining and this accelerated slightly in July, making it the steepest pace of decline in just over three years. This is as expected as employers sit tight on recruitment until the economy settles. This approach is never a long-term solution. Widespread skills shortages also continue to contribute to this picture. Nonetheless, it’s important to note that the use of temporary workers does continue to be how employers weather this uncertainty, signalling three years of growth in temporary jobs.
Candidate availability is easing, giving employers more choice
July figures report the sharpest upturn in labour supply since December 2020. Multiple factors are contributing including hiring freezes and redundancies. Candidate supply has increased for five consecutive months now, offering some relief to employers who have been attempting to hire in an extremely tight labour market. There’s also growing availability of temps, albeit not as sharply as for permanent workers, giving employers options for weathering the current period of economic uncertainty.
Salary inflation continues, but nudges downwards
Those looking for new roles amidst cost of living concerns will be pleased to learn that salary inflation remains strong. However, the intensity of salary and temporary wage inflation is now easing to the lowest rate since April 2021, offering some relief to employers. That said – there’s no escaping that it’s still undeniably high, especially in the North of England.
Demand for staff continues but eases
Vacancies have continued to expand, but notably at the slowest rate in 29 months. There remains a continued upturn in demand for permanent staff, but it’s also the weakest we’ve seen since recovery began in March 2021. There remains solid demand for temporary workers. According to the Office for National Statistics (ONS), there were 1,034,000 available roles in the three months to June 2023. It’s vital to realise that these numbers remain high when viewed in the wider context of historical data and +25.2% higher than immediately before the pandemic.
Looking at the bigger picture
As has been expected with the latest and extending stretch of economic uncertainty, the sharp upward trends of recent years that led to an excessively tight labour market are changing. This may signal concern for some, but this would largely involve getting ahead of ourselves and not looking at the full picture.
Post-pandemic recovery was sharp and led to intense and historically unusual data sets which were never sustainable. Growth in the jobs market continues, but it’s just dampening to more realistic levels. The concerns are about how long the trend will continue for, and whether declines sharpen. However, there is positive news on the horizon.
In conjunction with the Report on Jobs, the latest REC/KPMG Jobs Outlook Survey revealed that business confidence in the UK economy is nudging upwards, and this trend has remained solid for months now. Furthermore, employer confidence in future hiring over the coming year is also up by five percentage points to net +7. This is matched by similar data from the Confederation of British Industry and the latest Bank of England prediction that they expect employment growth.
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