Jobs in the UK are drying up
The latest KPMG and REC UK Report on Jobs survey shows a decline in the recruitment of permanent staff at the end of the third quarter, with employers citing lower confidence and rising costs as the reasons for the slowdown.
Vacancies data meanwhile highlighted a marked drop in demand for staff that was similar to that seen in August. The sustained fall in hiring and reports of redundancies drove a further rapid increase in candidate numbers for both permanent and temporary positions.
The shift in demand and supply for workers placed downward pressure on pay, with both permanent salaries and temp pay rates up only marginally.
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 data shows that starting pay for permanent workers rose negligibly in September, with the rate of growth the weakest seen since the current run of pay inflation began just over four-and-a-half years ago.
The near-stagnation of salaries coincided with reports of weaker demand for workers and reduced hiring budgets. Temp pay growth also eased in September, with wages increasing only slightly overall.
Demand falls while availability increases
Overall vacancies across the UK continued to fall markedly at the end of the third quarter. Moreover, the rate of contraction eased only slightly from August’s six-month record.
Underlying data indicated that demand for permanent workers continued to decline at a steeper rate than for short-term staff.
Reduced recruitment activity and redundancies were linked by survey respondents to a further sharp increase in the availability of workers in September.
This was despite the rate of expansion slowing from August’s post-pandemic record. The supply of both permanent and temporary staff increased at softer, but similarly marked rates.
“With very little positive news out there on the economy in recent months, and lots of speculation about the Budget, it is understandable that employers are cautious with their hiring,” said Jon Holt (Group Chief Executive and UK Senior Partner KPMG).
“But despite these headwinds, our annual CEO Outlook revealed this week that chief executives are more upbeat about future growth prospects for their industry and the UK economy than might be expected. They are resilient and responding to challenges by adapting their investment strategies to focus on AI adoption, managing cyber risk and upskilling their talent.”
While the jobs market has not yet turned a corner and remains tough, there was some stabilisation in some of the numbers last month, added Holt.
“While the public finances provide little room for manoeuvre in November, some clear signals from the Chancellor that build on business confidence will hopefully support renewed hiring as we head into 2026.”
