There has been a sharp upturn in candidate availability, while pressure on starting salaries has started to ease.
The latest KPMG and Recruitment and Employment Confederation report on jobs shows that a hiring slowdown and redundancies have increased candidate availability, which rose for the fourth straight month in June. The upturn in total candidate numbers was the sharpest since December 2020.
Recruitment in June 2023
Growth in starting pay for both permanent and temporary or contract roles rose at a much slower rate in June 2023, after months of inflation due to the rising cost of living and competition over candidates, according to the analysis by S&P Global for KPMG and REC. Starting pay increased at its softest rate since April 2021.
However, recruitment in June 2023 has been subdued. Permanent hires continued to fall and growth in temporary placements has been “mild”.
Total vacancies expanded at the slowest pace in 28 months, as uncertainty over the economic outlook weighed on hiring decisions across the UK.
The report also found that:
- Permanent placements fell in all four monitored English regions bar the North East, which saw its first increase in hiring activity since February 2023
- London saw the steepest increase in temporary placements, while the North was the only region to see a decline
- Demand for permanent staff was most prominent in hotel and catering and blue-collar sectors, while job openings fell in IT and computing and retail
- IT and computing and construction were the only job categories to register lower vacancies for temporary workers.
Neil Carberry, REC chief executive, said: “There is a risk of seeing an element of Groundhog Day in June hiring, with permanent billing easing again and firms still turning to temporary staff in the face of uncertainty. But there was quite a lot of change in the shadows of the headline data.
“There was a significant step up in the number of candidates looking for a new permanent or temporary role. This is likely driven by people reacting to high inflation by stepping up their job search and by some firms reshaping their businesses in a period of low growth. It’s no surprise, therefore that the rate at which wages are rising has dropped again.
“Despite these trends, the labour market remains very tight. There are still broad skills shortages, with accountancy, construction, teaching and nursing among those sectors struggling to find and retain workers. This is despite the supply of candidates across the job market having risen for four consecutive months.”
Carberry called for “a strong industrial strategy with people at its heart” to help overcome labour and skills shortages. This should include action on skills, immigration, childcare, transport and back-to-work support.
Claire Warnes, partner, skills and productivity at KPMG UK, said: “The sharp upturn in candidate availability this month – the highest for two and a half years – is a big concern for the economy reflecting the effects of a sustained slowdown in recruitment along with increasing redundancies across many sectors.
“Employers are also tending towards temporary hires, given lingering economic uncertainty. And yet, the labour market remains reasonably resilient, with notable demand for skilled workers, both permanent and temporary, across a multitude of sectors this month.
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“The evident mismatch between open vacancies and the skills of available candidates needs to be addressed urgently and a concerted focus on upskilling and reskilling is long overdue.”
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