Recruitment intentions remained subdued as 2023 drew to a close, according to the latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global.
Permanent placements and temp billings “declined again in December, albeit at softer rates than in November, as employers maintained a cautious stance regarding hiring amid the weaker economic climate.”
At the same time, overall vacancies fell slightly “for the third time in the past four months.”
The supply of candidates meanwhile continued “to rise sharply, despite the rate of expansion easing from November’s near three-year record.”
Recruiters often mentioned that redundancies and lower levels of hiring activity “had increased the pool of available candidates for both permanent and temporary roles. Nevertheless, competition for suitably-skilled workers remained a key factor pushing up rates of starting pay again in December.”
The report is compiled by S&P Global from responses to questionnaires “sent to a panel of around 400 UK recruitment and employment consultancies.”
Downturn in hiring activity eases in December
Although recruitment consultancies reported “a further decline in hiring activity at the end of 2023, both permanent placements and temp billings fell at softer rates than seen in November. Panel members often mentioned that muted demand for staff and recruitment freezes amid the weak economic climate had weighed on hiring decisions. Permanent staff appointments continued to decline at a notably faster pace than that seen for temp billings.”
Slightly stronger increase in starting pay
Latest survey data indicated that “the rate of starting salary inflation picked up from November and was sharp overall. That said, the increase was the second-slowest recorded since March 2021 and below the historical trend.”
Temp pay growth likewise quickened, “climbing to a four-month high, but remained below the long-run average. Recruiters commented that while competition for suitably qualified staff had contributed to further increases in pay, there were indications that employers’ budgets were under greater pressure.”
Availability of workers continues to rise markedly
Candidate availability continued to “rise at the end of the year, with panel members frequently mentioning that redundancies and a slowdown in hiring had pushed up labor supply. Although easing from the near three-year records seen in November, rates of expansion for both permanent and temporary candidate numbers remained rapid overall.”
Commenting on the latest survey results, Justine Andrew, Partner and Head of Education, Skills and Productivity at KPMG UK, said:
“It’s a muted end to the year for the labor market, which despite some loosening during 2023, continues to be tight. While the data for December shows hiring activity for both permanent and temporary roles fell at a softer rate than the previous month, businesses are still making redundancies and pausing hiring due to a lacklustre economic outlook. This has driven a further decline in permanent job opportunities, while we continue to see a rising number of people looking for new work.”
Neil Carberry, REC Chief Executive, said:
“The slowdown in our labour market seems to be easing a bit. Given that December is a time when employers generally postpone activity into the new year, this is a positive sign that the labour market is weathering the current economic storm.”
As mentioned in the report:
“Recruiters went into 2024 with hope that an upturn is coming, based on feedback from clients. Driving this economic growth would be a huge benefit for us all, leading to more successful firms, higher pay, and the ability to cut taxes and fund public services. But the growth must come first. The Chancellor has already set a date for the Budget – he should use it to set out steps that set firms free to grow the economy, from skills reform to regulatory change, including a more balanced debate on immigration for work and its impact on growth.”