Overall job vacancy growth has picked up for the first time in nine months, but permanent hires continue to fall as employers take a more cautious approach to recruitment, the latest analysis from KPMG and the Recruitment and Employment Confederation (REC) has found.
The number of job vacancies expanded at their quickest rate since October, driven by strong demand for temporary workers over permanent staff, according to the UK Report on Jobs covering 12-25 January 2023.
The permanent staff index was 54.2 and the temporary placement index was 56.1 – any reading above 50 signals an increase on the previous month.
However, the rate of growth in both types of vacancy was slower than historical trends. For example, in September 2022 the vacancies index was at 58.0 for permanent staff and 58.8 for temporary staff.
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The rate of overall vacancy growth had been declining month-on-month since last spring, and January was the first month where growth picked up.
The number of permanent hires made by employers fell for the fourth consecutive month, albeit at a slower rate than previously seen. The permanent placement index was 46.8, while the temporary placement score was 52.3.
Candidates also became more scarce, mainly because of concerns about the economic climate and job security, but the rate of contraction was the softest seen since March 2021 and much slower than the 2022 average.
Candidate shortages and concerns about the rising cost of living pushed up starting salaries, while temp pay inflation reached a four-month high.
REC chief executive Neil Carberry said: “January’s recruitment activity suggests that speculation about a shallower economic downturn may be justified.
“Taking into account the high level of activity last summer and autumn, when the permanent slowdown started, activity levels for both permanent and temporary roles are still high – something which is reflected both in this survey and in feedback from REC members.”
However, Claire Warnes, partner, skills and productivity at KPMG, warned that the jobs market remained volatile in 2023, despite the vacancy growth in January.
“Recruiters and employers should be thinking creatively about how to attract and retain permanent hires to bring about stability, including by taking on more apprentices across a range of age groups, and investing in upskilling and reskilling their existing staff.”
Carberry called on the government to do more to help broaden the labour market.
He said: “The need to address the fundamental challenges our labour market faces has not changed with the turning of the year. From skills to tackling economic inactivity, and from immigration to childcare there is much that can be done in partnership with business to help our economy grow and workers to prosper.
“Ahead of the Budget, the Chancellor should put the people stuff first across the whole of government. Every department has a role to play in getting growth going – and that starts with enabling our labour market.”
The UK Report on Jobs also found that:
- The Midlands saw the steepest rate of decline in permanent appointments across the four monitored English regions, and was the only region to see a fall in temporary placements
- Nine of the ten monitored job categories saw an increase in demand for both temporary and permanent staff, with the exception of retail
- The nursing/medical/care sector saw the greatest demand for temporary workers, followed by accounting/financial and secretarial/clerical.
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