There’s growing confidence among employers in the second quarter of 2023, with demand for labour remaining strong and high levels of vacancies. The Bank of England May 2023 Monetary Policy Report shows that the market is more positive than expected, and unemployment is expected to remain below 4% until the end of 2024. While there are wider economic concerns, there are signs of growth.
Commenting on the latest KPMG/REC Report on Jobs, Claire Warnes, Partner, Skills and Productivity at KPMG UK said,
Businesses ready to grow can feel optimistic about an increasing pool of available candidates, which has expanded at the sharpest rate in two-and-a-half years.
Let’s dig a little deeper into the latest findings.
Hiring activity is dampened but strong
Wider economic concerns affect employer hiring decisions and this is reflected with the number of people being placed in new permanent jobs falling for the eighth month in a row. Temporary jobs continue to gain popularity, with increases for 34 consecutive months. It’s normal at times of economic concern for employers to utilise temporary workers while they delay permanent hiring decisions.
Employers should start to find things easier with better candidate supply
Employers have struggled for a long while with low levels of candidate supply. We’ve now witnessed three solid months of increases in candidate supply. Additionally, the rate of expansion was the sharpest seen for almost two and a half years. As some employers weather the uncertainty by using redundancies, this makes a better pool of candidates for those employers looking to expand. It’s also worth noting that some reports indicate that supply is also expanding as candidates gain confidence to look for new, better paying roles. There is growing candidate supply for both permanent and temporary jobs.
Starting pay continues to rise but has eased slightly
In line with inflation and the cost of living pressures, it’s been no surprise that salaries and wages have increased considerably in recent times. Starting pay growth continues but has softened slightly. This applies to both permanent and temporary positions. There have now been 27 solid months of starting salary growth for permanent and temporary workers. Starting pay increases for those in permanent jobs and temp roles have been particularly marked in the North of England.
Vacancies are increasing but softening
We continue to experience growth in demand for staff but there have now been three consecutive months of softening. It’s worth noting that this is quite patchy according to sector. For example, there is notably high demand in the engineering sector, across both permanent and temporary roles. According to the Office for National Statistics (ONS), there are currently 1,083,000 open vacancies. This is considerably above the pre-pandemic number of 826,000 in the three months to February 2020.
What the latest data from the REC Report on Jobs shows is the continued resilience and strength of the UK jobs market. With positive employer confidence and positive (and growing) business confidence in the UK economy, employers will turn to recruitment to enable success.
It remains vital for employers to benefit from the support of excellent recruiters to manage wider problems such as skill shortages, immigration to employment regulation and the continued effects of a tight labour market. There are record numbers of economically inactive people due to long-term sickness too. As such, those employers wishing to excel in the current climate could do a lot worse than turn to the experts for help sourcing their workforce.
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