The end of 2024 saw the fastest decline in permanent job placements since August 2023, according to newly released figures.
Respondents to the KPMG and Recruitment and Employers Confederation (REC) survey for December 2024 reported a lack of market demand for candidates, which could be linked to fears over the rise in employee National Insurance contributions from April 2025.
However, according to Neil Carberry, REC chief executive, December was a poor month for recruitment at the best of times and there were grounds for optimism among businesses for 2025 given wider economic trends.
The findings were supported by the latest figures from the Office for National Statistics (ONS), which showed that UK vacancy numbers continued to fall in the three months to November, dropping 10,000 since October to a level of 818,000 – the lowest overall level since the three months to May 2021.
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Despite this, there were indications that starting salaries for permanent staff went up strongly during December. The pay rates for temp staff showed a more modest increase.
The fall in vacancies was at the steepest recorded in more than four years, with the fall in demand for permanent staff being more severe than at any time since August 2020. However, in London the decline was less marked than in other areas of the UK.
Recruitment consultants reported another steep increase in staff availability during December. Overall, the expansion in availability was the sharpest since June. The upturn in growth was primarily driven by the permanent staff category, although temp worker availability also rose sharply at the end of 2024.
In terms of temp billings, the Midlands bucked the wider market trend, registering some modest growth; but all other English regions saw a contraction.
The fall in demand for workers affected private and public sector organisations similarly. The steepest rate of contraction was seen for executive/professional positions followed by those in IT.
Average earnings growth in the UK strengthened during October, reaching an annual rate of 5.2%. That was up from 4.4% in September and the highest level since May 2024. Both the private and public sectors experienced faster annual rises in earnings during October. For the private sector, earnings growth improved to 5.4%, up from 4.6% and a five-month high.
Public sector workers experienced a 4.2% annual increase in earnings, also a five-month high and up from September’s 3.5%.
Jon Holt, group chief executive and UK senior partner KPMG, warned that the hiring market could continue to show signs of caution in the short-term, as businesses pause to take stock of higher employment costs, a more gradual pace of interest rate cuts and rising inflation.
“However,” he added, “as 2025 progresses and UK economic growth picks up, businesses will need new talent. Salary inflation being at its steepest in four months shows they are still willing to compete for it.”
Holt said chief execs would be counting on new policies which support their 2025 growth ambitions and boost confidence to invest.
For Neil Carberry, REC chief executive, the report emphasised a “weak mood” among businesses as they made changes designed to save on costs after a tough Budget. But he added that December was always a hiring low point, and businesses should be optimistic with inflation now under control, low unemployment and economic growth expected.
“The fundamentals are better than many appreciate,” he said.
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