The UK’s job market is in big trouble – and it’s getting worse
Ongoing uncertainty around the economic outlook and concerns over costs contributed to a further reduction in staff hiring across the UK in August, according to the latest KPMG and REC UK Report on Jobs survey, compiled by S&P Global.
The report is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
The report shows recruiters signalled further marked falls in permanent placements and temp billings in the latest survey period, though the rates of decline were the least pronounced in three months.
Overall vacancies meanwhile fell sharply once again, which, alongside reports of redundancies, drove the steepest upturn in candidate availability since November 2020.
Shrinking demand for staff and concerns around payroll costs dampened rates of starting pay in August. Notably, starting salaries and temp pay both increased at rates far below averages seen since the survey began in 1997.
A decline in hiring
Recruitment consultancies across the UK signalled a further reduction in the number of people placed into permanent job roles in August.
Although the rate of contraction was the slowest seen in three months, it was steep overall and often linked to weak confidence around the economic outlook and concerns over costs. Temp billings also fell at a slower, but still solid rate.
While hiring weakened, the availability of staff increased at a rapid and accelerated rate in August. Furthermore, the latest upturns in permanent and temporary labour supply were the most pronounced since November 2020, with the former seeing the sharper rate of growth overall.
According to recruiters, redundancies, fewer job opportunities, and concerns over current job security were key factors pushing up worker availability.
The latest survey pointed to a further marked drop in total vacancies across the UK midway through the third quarter. Notably, the pace of reduction was the steepest recorded in six months. Divergent trends were seen by job type, however, with a sharper decline in permanent vacancies, contrasting with a softer fall in temporary job opportunities.
A shot of confidence is needed
Employers need a shot of confidence along with their seasonal flu jabs this autumn, said Neil Carberry (REC Chief Executive).
“August saw recent declines in the market moderating, and a few positive signs – like an improving market for temps in the Midlands. Overall, permanent placements are declining at their slowest rate since May, and the reduction in temporary billings also eased.
“There is certainly potential out there – but with fewer vacancies and more candidates looking for work, the overall picture is still subdued. While we have seen a summer slowdown, we will hopefully see more positive signs when the September data come through next month.”
Carberry noted that all eyes are now on the Autumn Budget, in the hope that the Chancellor won’t do any further damage to the labour market with costs on hiring.
“For the economy to thrive, the Budget must recognise the need for investment in people. Long-term investment in skills, workforce stability, a more practical approach to the Employment Rights Bill, and meaningful partnerships with employers will yield far more enduring returns than short-term fixes,” he said.
