Hiring into permanent positions fell sharply at the start of 2024, but salaries have increased at their softest rate for nearly three years.
The latest report on jobs from the Recruitment and Employment Confederation (REC) and KPMG, compiled by S&P Global, finds that in January 2024, overall demand for workers fell for the third month running.
Although starting salary inflation in January was still fairly sharp, driven by competition for skilled candidates, it grew it its softest rate since March 2021.
The score for permanent placements in January was 43.4, down from 45.6 in December, indicating that demand has contracted (a score above 50.0 indicates growth on the previous month). For temporary staff placements the score remained the same at 48.9.
Hiring in January 2024
Candidate shortage afflicts two-thirds of businesses
The sharpest fall in permanent placements was seen in the Midlands, according to the survey of 400 UK recruitment and employment consultancies. Higher temporary placements in the north and south of England contrasted with declines in the Midlands and London.
Total vacancies across the UK declined during January, albeit marginally. Demand for staff fell in half of the 10 monitored job categories, with the steepest rates of decline seen in retail, construction, IT and computing. Strong demand was reported for nursing, medical and care roles.
Meanwhile, jobsite Indeed has said growth in UK job postings have fallen below pre-pandemic levels in what has traditionally been a busy month for recruitment. In January 2024 job postings increased by just 0.2%, significantly less than the 11.3% rise seen in January 2020 and the 3.4% seen in 2023.
Jon Holt, chief executive of KPMG in the UK, said recruiters and employers will be looking for some “policy stability” in 2024.
“The skills gap is part of this story. We know the UK’s ambition is for technology to drive productivity and economic growth, and yet we still have a shortfall in skilled tech talent,” he said.
“If the UK is serious about quipping the workforce for a modern digital economy, we need a government and business working together and investing in reskilling and upskilling.”
REC chief executive Neil Carberry said: “The chancellor has a perfect opportunity in the spring budget to give some clear signals on growth. A long-term plan to tackle skills and labour shortages, economic inactivity and weak productivity is essential. A spring budget full of practical steps on skills, welfare to work and the cost of doing business will help hugely.”
Jack Kennedy, senior economist at Indeed UK said: “The UK labour market hasn’t received its usual January injection of job postings, signalling a softening in hiring demand following the post-pandemic boom. The question in 2024 is whether the job market stabilises or retreats further.
“The Bank of England is hoping the continued fall in vacancies will mean wage growth easing from its current elevated levels, paving the way for interest rate cuts later this year. But with unemployment still low and continuing challenges around workforce participation, it remains a somewhat tight labour market.
“From an employers’ perspective, hiring challenges have eased but haven’t completely disappeared, with many industries needing to fill roles but not always receiving sufficient jobseeker interest. Remaining competitive on pay, benefits and flexibility continues to be important to attracting and retaining talent.”
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