As KPMG and the Recruitment & Employment Confederation release their latest comprehensive guide to the UK labour market, we summarise the topline takeaways from the report.
Staff Appointments
Permanent appointments fell slightly, declining for the sixth time in a row during March, though the pace of reduction was the weakest seen during the period. The sharpest fall in permanent placements was seen in London, with mild reductions in the Midlands and the North and a renewed expansion recorded in the South.
Meanwhile, temp billings growth improved to a six-month high, with many suggesting that a preference for short-term staff during the uncertain economic climate. The Midlands was the only area to record a fall, albeit mild.
Vacancies
Vacancies continued to rise strongly in March, with permanent job openings rising at a quicker rate than that seen for temp roles and the steepest increase seen for permanent workers in the private sector.
Staff Availability
The availability of candidates to fill roles increased at the end of the first quarter, with the supply of permanent staff rising for the first time since January 2021 and the North of England registering the steepest upturn in permanent candidate numbers. The Midlands was the only region which reported a decrease.
After a continuous fall over the last two years, temp worker availability also increased modestly during March, particularly in the North of England and London, with slight falls in the Midlands and the South. Recruitment agencies surveyed suggested the overall rise in availability was due to the end of projects and cost-cutting measures which saw a reduction in the usage of temp workers.
Pay Pressures
UK recruitment consultancies signalled a sustained increase in starting salaries for permanent workers in March across all regions, stretching the trend of rising pay for just over two years. According to panel members who were surveyed, this rise reflects efforts to attract scarce candidates and the higher cost of living.
March also saw an increase in average wages for temp staff for the twenty-fifth straight month, again attributed by those surveyed to competition for staff and the rising cost of living. This increase was most notable in the North of England and the softest in London.
Market Headlines
The official headline numbers show some progress on vacancies being filled – a step in the right direction - but there is still a long way to go to get back to pre-pandemic levels of stability and labour supply. The latest data from the Office for National Statistics provides some good news with the employment rate in November 2022-January 2023 up by 0.1% and the economic inactivity rate was down by 0.2%. In the same period, the unemployment rate remained stable at 3.7% compared to the previous rolling quarter. Although the number of vacancies for December 2022-February 2023 decreased by 51,000 on the quarter, it is important for policymakers to appreciate that it remains at historically high levels. But the headline numbers are improving, reflecting that the jobs market has remained resilient despite an economic downturn.
Report summary
A softer fall in permanent placements, while temp billings growth accelerates
Candidates availability rises for the first time in 25 months with the overall supply of workers increasing for the first time since February 2021 at the end of the first quarter
Starting salary inflation remains sharp in March, with links to shortage of specific skills and cost-of-living pressures
Demand for staff continues to increase
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