The latest KPMG and REC Report on Jobs has two broad characteristics. Firstly, there are signs that while the labour market remains tight this side of 2024; it looks as though employers are already building confidence for new hiring plans in the New Year. Businesses have taken a somewhat conservative approach towards hiring this year, but there are signs that this will improve. Secondly, what the overall averages hide is some stark regional variation. Notably, while overall data shows a subdued and difficult labour market overall, in the North of England, we’ve seen good growth in certain areas, such as temporary hiring. Sector variations are worth paying attention to as well.
Here we dive into the data to reveal what it means for employers making decisions.
Hiring activity is down overall, but look closely at regions
Due to the weaker economic climate, it’s no surprise that hiring activity has been subdued of late. Indeed, overall, new starters in permanent roles are at the lowest numbers since June 2020. Employers are using temps less too.
However, it’s really important to scrutinise this data carefully. The reduced use of temps is both only marginal and also inconsistent across sectors, industries and regions. For example, hospitality temps in London are in low demand, but engineering and office-based temps in the North of England are in higher demand. It’s why it’s vital to dig into the data to see what’s happening in relation to your competitors.
At the moment, many employers are cutting costs. It makes sense while inflation is still higher than the Bank of England wants it to be, and while interest rates remain relatively high. However, there are good indications that business confidence is building for 2024.
There are growing pools of candidates, but it depends on who you’re looking for
Overall, the number of candidates available is growing at a faster pace than we’ve seen since December 2020. This is most likely due to growing redundancies as some industries need to rein in costs, but analysts also attribute some candidate supply to those looking for better paying roles due to the cost of living crisis.
Again, however, it’s important to look at the broader regional picture. Although there are increases in the number of available temporary workers across the country, the softest rise in temporary candidates was in the North of England.
Starting salaries and wages are still rising, but it’s slowing down
Businesses have faced sharp increases in the amount they need to pay to secure talent for a long time now. However, offering signs of relief, the growth in permanent starter pay has dropped to the softest increase for 33 months. Nonetheless, growth is still sizeable. The Office for National Statistics (ONS) revealed that employee earnings expanded +7.9% in the third quarter of 2023.
The number of job opportunities is dropping slightly, but it’s industry specific
Vacancies have declined slightly for the second time in three months. This is only the second fall since February 2021.
Again, we need to pull the data apart to find what really matters to individual businesses. Firstly, these falls are only relevant for permanent jobs. Temporary vacancies continue to rise in the private sector as employers use temps to weather uncertainty. Secondly, it’s not consistent across all permanent roles in all industries. For example, permanent job vacancies in the Engineering sector continue to grow.
As we come towards the end of a challenging year for the UK economy, we can see that while the labour market is tight, it’s also incredibly resilient. We anticipate employer confidence to gradually increase in 2024. We will be here to help you navigate hiring decisions within your specific sector and region.
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