Permanent staff appointments continued to fall in May, according to the latest survey of UK recruitment consultants, but there is renewed optimism over the state of the UK labour market according to analysts.
The latest KPMG/Recruitment Employment Confederation analysis suggests that although May was the 20th successive month in which placements have fallen, the latest decline was modest and the slowest since March 2023.
A similar trend was seen for temp billings, with the latest contraction the weakest in four months. There were reports that slow decision-making, a lack of vacancies and specific candidate shortages influenced placements.
Typical starting pay for new recruits rose again during May, reflecting the competitive market for talent and April’s increases in minimum wage rates. For permanent workers, salaries were reported to have increased markedly and to only a slightly lesser extent than April’s four-month high. Temp staff saw a similar trend, with pay rising at only a slightly slower pace than in the previous month.
UK labour market
Effects of recession seen in April recruitment slump
Starting salaries grow at a faster pace
The fall in demand for staff in May was exclusively led by permanent workers, as temp staff demand was unchanged in the latest survey period.
May’s survey revealed another steep increase in staff availability. The rate of growth was the steepest recorded by the survey since December 2020. The faster expansion in the number of people looking for work was seen for permanent job roles.
Panellists noted that a mixture of redundancies, higher unemployment and reduced demand for staff led to the broad rise in candidate availability.
Of the 10 sectors covered by the survey, just three recorded growth in terms of vacancies. The strongest increase was seen for engineering, followed by blue collar. The steepest drops in demand for permanent workers were seen for retail and secretarial/clerical.
For public sector workers, demand continued to fall for both permanent and temporary staff. The steeper contraction was again for permanent workers.
Jon Holt, chief executive and senior partner of KPMG in the UK, said although the UK labour market was resilient and there were signs of more optimism over the economic outlook for the second half of 2024, “May’s data underscores the complexities in the current labour market. While demand overall remains weak due to firms still stalling on hiring
decisions, the pace of decline has slowed for the third month in a row. Some sectors even saw demand growth – although a lack of skilled applicants could put further upward pressure on pay as employers compete to attract the best talent.”
Political stability after the general election would improve matters economically, said Neil Carberry, REC chief executive: “While permanent hiring remains weak, these are the best numbers we have seen in more than a year, and the temp billings number has also improved.”
However, he said: “No attempt to drive growth will succeed without the next government addressing people issues within its first 100 days. This must include reform of the Apprenticeship Levy to cover high quality, modular training, and a long-term cross-departmental strategy to tackle labour and skills shortages.”
The TUC did not view the economic outlook with the same level of optimism given new unemployment figures.
Its analysis of official statistics showed that unemployment levels increased by 178,000 across England between October-December 2023 and January–March 2024 (the latest period for which data is available).
North-west England with a +47,000 and a 1.2 percentage point increase saw the biggest increase in unemployment, followed by the West Midlands (+38,000 and +1.2 ppt) and London (+37,000 and +0.8ppt).
The TUC said the UK as a whole had suffered the biggest rise in unemployment of any OECD country since the turn of the year. The unemployment rate for all OECD countries – and likewise for EU countries – was unchanged over the same period, it said.
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The union body highlighted the importance of the New Deal for Working People and the Green Prosperity Plan for boosting growth and productivity and making work pay.
