Recruitment activity has slipped to its lowest level for 19 months as candidate shortages and the weak economy restricted growth.
Correspondingly, vacancies expanded at their slowest rate since February 2021, the latest KPMG and Recruitment and Employment Confederation report finds.
There were further significant rises in starting pay, driven by the rising cost of living and competition for workers. This was despite the rate of starting salary inflation moderating further from March’s all-time record to a 15-month low. Temp wage growth also edged down to its weakest since June 2021, found the REC.
Worryingly for employers, the supply of candidates is continuing to fall at a record pace, although September saw signs of an easing in the downturn in labour supply. Permanent staff availability deteriorated at a quicker pace than that seen for temp workers.
A key factor weighing on candidate numbers was a greater hesitancy among people to apply for new roles, driven by fears over the economic outlook. A generally low unemployment rate, skills shortages and Brexit also affected candidate availability.
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Claire Warnes, head of education, skills and productivity at KPMG UK, said more workers were now being influenced by worsening economic conditions and that employers who were proactive over upskilling would see benefits.
“Deepening economic uncertainty has meant that workers are choosing to stay put in current roles, rather than apply for new roles, leading to a moderation in the overall rate of vacancy growth,” she said. “Some employers, even those who anticipate that the recession may be short, are taking steps now to contain costs, including hiring freezes. Those employers who continue to invest in their workforce, particularly upskilling, may find they weather the recession better and will be in a stronger position to benefit from the upturn as and when it comes.”
For Neil Carberry, chief executive of the REC, the situation demanded a new approach from business leaders that focused on the needs of employees.
He said: “A lot of the answers lie with hiring businesses. Firms need to work with skilled recruiters on offers that will maximise the skill base we have. There has never been a more important time for business leaders to put the people stuff first.”
The latest survey found that the steepest increase in demand for staff was seen for temporary workers in the private sector during September. The softest expansion was meanwhile seen for permanent vacancies in the public sector.
Growth in demand slowed across all categories with the exception of temporary staff in the public sector.
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