The availability of candidates rose for the first time in just over two years in March, according to the latest Report on Jobs from KPMG and the REC.
At the same time, starting salaries continue to rise as employers try to attract candidates and the cost of living increases. The total number of vacancies also went up, although growth was slightly slower than in February.
Permanent placements fell for the sixth month in a row, but at a slower pace than previously. The REC said many clients had delayed decisions around hiring due to economic uncertainty and tighter budgets. Temporary hiring rose at the quickest rate since September 2022, however.
The overall supply of workers increased for the first time since February 2021 over the first three months of this year, with rises in availability of candidates for both permanent and temporary work.
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Salaries rose for permanent workers in March but the rate of increase was the second slowest it has been for almost two years. For temporary workers, starting pay rose sharply. In both cases, offering higher salaries was connected to shortages of specific skills and rising inflation.
London saw the sharpest fall in permanent placements, and permanent vacancies also declined in the Midlands and north of England. London registered high growth in temp billings, however.
The highest increase in demand for staff was for permanent workers in the private sector, with all categories seeing an increase in demand apart from retail. The highest demand for staff was in nursing and medical care, followed by engineering and accounting/financial.
Demand for temporary staff was highest in hotel and catering, while temporary retail vacancies stagnated.
Claire Warnes, partner in skills and productivity at KPMG, said March was a “curate’s egg for the jobs market”, with improved candidate availability offset by redundancies or cautious hiring of temporary rather than permanent workers.
“While the labour market continues to show resilience, it is nowhere near pre-pandemic levels of stability,” she said. The government’s Spring budget included some support for workers, but it was a missed opportunity to provide much needed help for businesses to upskill their people, and to reskill those people who are economically inactive and want to return to work.”
Neil Carberry, chief executive of the REC, said employers had gained in confidence in recent weeks, and this was reflected in the latest data.
“But this cautious optimism belies the scale of the challenge we face in tackling shortages and addressing economic inactivity,” he added.
“The recent budget did call out the need to address labour market shortages, but the steps taken fell short of the more comprehensive workforce strategy that is needed if we are to avoid losing two Elizabeth Lines of growth every year from 2024.”
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