The jobs market ended 2022 on a cautious note, according to the latest Report on Jobs from the Recruitment and Employment Confederation and KPMG.
Permanent placements fell for the third month in a row in December 2022 and at the quickest rate since the start of 2021 as economic uncertainty and shortages of candidates impacted recruitment.
Billings for temporary staff rose “only modestly”, according to the REC and KPMG, while overall vacancies rose at the slowest rate since February 2021. The overall rate of vacancy growth weakened for the ninth consecutive month, although agencies reported a sustained rise in demand for staff in December.
Candidate availability fell, but at the softest pace since March 2021. The REC and KPMG attributed this to candidates’ caution around seeking a new role in the current economic climate.
That said, the slowing rate of candidate shortage could also be attributed to reports of redundancies in some sectors, the report added.
Jobs market
Third of employers experienced worker shortages in December
Pay pressure on employers continued to soften in December, but inflation meant wage rates remained strong in the context of historical data. Rates of both permanent and temporary pay growth were their lowest since April 2021.
Where salary hikes were reported, this tended to be linked to competition for candidates or the rising cost of living. The Office for National Statistics reported last week that 32% of private sector organisations had experienced a shortage of workers in December.
Temporary billings rose most strongly in the south of England, and demand for staff remained stronger in the private sector than the public sector. The steepest increase in staff demand was for temporary workers in the private sector, the report found.
Permanent staff were most in demand in nursing/medical/care, followed by hotel and catering. Construction saw the quickest drop in vacancies.
Temporary staff demand rose across all sectors, according to the REC and KPMG. Retail, hotel/catering and nursing/medical/care experienced the sharpest rises in demand. Demand for temporary staff had the slowest upturn in the executive and professional sector.
Neil Carberry, chief executive of the REC, said the slowdown in placements was not unusual for December, but could be “part of a wider softening trend in the permanent market”.
“Recruiters tell us that this was enhanced by firms pushing hiring activity into January in the face of high inflation and economic uncertainty,” he said. “The big test of the labour market will come this month.”
He added that the overall picture is still of “a robust labour market”, although the construction sector was a cause for concern because it is often a bellwether for the health of the wider economy.
“As we move into 2023, the need to ensure our labour market can deliver economic growth and prosperity should be a critical concern for politicians. People telling recruiters that they are increasingly anxious about moving jobs is a concern in this regard – as a move is a great way to boost pay and build up skills,” he said.
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“If people are less willing to move jobs, this could make shortages worse in the near term.”
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