Growth in job vacancies has fallen to an 18-month low, as greater economic uncertainty, rising costs and candidate shortages all affected employers’ ability to hire both permanent and temporary staff in August.
Although the number of vacancies did increase in August, the Recruitment & Employment Confederation (REC) and KPMG UK Report on Jobs found that growth in permanent job placements was little changed on July’s 17-month low, while growth in temp billings was at its lowest for 18 months.
The survey of 400 recruitment and employment consultancies, conducted by S&P Global, found that although there was an upturn in hiring, many employers had been put off by the uncertain economic outlook and rising bills.
The permanent placements index was 53.3 in August 2022, compared with 59.8 in April, while the temporary placements index was 56.4, down from 59.8 in April. A score above 50 represents an increase.
Nursing, medical and care roles topped the permanent staff demand league table in August, followed closely by hotel
and catering staff. The softest upturn in vacancies was once again seen in retail.
There was a sharp fall in candidate availability, with the report finding this was mainly down to a generally tight labour market, fewer workers from overseas and a reluctance to change jobs due to uncertainty.
Organisations tried to lure staff with hire starting salaries for permanent roles, but the rate of growth was the softest seen in over a year. Likewise, temp wages rose at the second-slowest rate since June 2021.
Claire Warnes, head of education, skills and productivity at KPMG UK, said: “Unsurprisingly, the economic uncertainty continues to impact all aspects of business as we come to the end of the summer. August’s data show an increasingly challenging jobs market, both in the sharp decline in the supply of candidates and in the slowdown in recruitment which we have seen for the last few months. Despite these challenges, it’s vital that investment in people continues. Businesses may be better able to weather the economic storm through sustained investment in upskilling the available workforce.”
REC chief executive Neil Carberry said: “Reports from REC members suggest that any lowering of confidence in the market is driven primarily by candidates playing it safe, with the effect of further tightening the market. So it’s no surprise that pay rates continue to rise, especially considering increasing inflation.”
“The big question is now about the sustainability of this positive position, as labour shortages damage growth and pay over the long term. Controlling inflation and a clear plan for growth are essential parts of making sure the UK is resilient to economic uncertainty. But both rely on our new Prime Minister and her team working with businesses to address shortages across our labour market. Radical reform of the failed apprenticeship levy, support on small business energy costs, an immigration policy that helps the economy and regulation that supports temporary work rather than penalising it, all have to be on the agenda.”