Rounding off Quarter three of 2022, the latest data from the REC’s Report on Jobs highlights how economic uncertainty affects hiring decisions and candidate availability. For now, the labour market remains incredibly tight and the most recent data paints an interesting picture.
- Recruitment activity is slowing
It’s been an intense picture for around 1.5 years now, but the strong demand for staff remains true. However, the growth in this activity is now notably easing due to things like candidate shortages and a weaker wider economic climate. Indeed, the report reveals the slowest increases in both permanent and temporary jobs for 19 months. In real terms, this is the weakest rate of growth in the current period of expansion, highlighting that change is afoot. Indeed, while expansion continues, it is only mild.
- Demand for staff is waning
Demand for staff has been extremely high, but overall vacancy growth softened for the sixth month in a row in September.
This is particularly noted in the temp sector with the expansion in temp billings being the softest seen in one and a half years.
Remember that demand is still high though. Both temporary and permanent vacancies remain high. Data from the Office for National Statistics (ONS) showed a lower number of vacancies than recently, but there were still 1,266,000 open vacancies in August which is 20% higher than it was a year previously.
- Pay pressures are high
With candidate supply issues and rising cost of living pressure, it’s no surprise that pay pressure continues with both permanent and temporary staff seeing increases. This is still the picture even though we’re now at a 15-month low with starting salary inflation, because things were previously so intense. This means that starting salaries for those in permanent positions have now risen for 19 months in a row. It’s a similar picture for temporary staff.
- Candidate supply continues to be problematic
There are indications, as well as a sense within the recruitment sector, that there is some easing to candidate supply. However, this is from a position of very low supply, and candidate numbers are still falling sharply overall, especially for permanent workers, now representing 19 successive months of decline. With economic uncertainty, it is unsurprising that candidates are wary to move. It’s also expected with low unemployment and ripple effects from Brexit. The latest data shows that candidate supply is quite notably an issue particularly in the North of England.
Commenting on the report, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK said:
“The UK jobs market remained tight in September, with candidate shortages impacting recruiters’ abilities to fill jobs. Deepening economic uncertainty has also meant that workers are choosing to stay put in current roles, rather than apply for new roles, leading to a moderation in the overall rate of vacancy growth. Some employers, even those who anticipate that the recession may be short, are taking steps now to contain costs, including hiring freezes. Those employers who continue to invest in their workforce, particularly upskilling, may find they weather the recession better and will be in a stronger position to benefit from the upturn as and when it comes.”
It remains the case that employers and candidates both need support to move forwards positively through the downturn and to achieve best outcomes at both an individual and business level.
We publish an overview of the REC/KPMG Jobs Outlook Report each month to keep you up to date with the UK recruitment and jobs market month by month.
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