KPMG and REC, UK Report on Jobs – February 2024

Overall demand for workers falls for third month running

Total vacancies across the UK declined again during January, albeit marginally. Demand for staff has now weakened in four of the past five months, driven by a sustained reduction in permanent job opportunities. Meanwhile, temp vacancies expanded at the slowest rate since November 2020 and only slightly.

Permanent salary inflation slips to 34-month low…

Although starting salary inflation remained sharp in January, the latest increase in pay was the softest recorded since March 2021 and slower than the series average. Temp wage growth quickened slightly to a five-month high, but was also below the historical trend. According to recruiters, competition for suitably-skilled staff amid a strong inflationary environment continued to push pay rates higher. However, there were also reports that pressure on client budgets had limited overall increases in pay.


…as supply of candidates continues to increase

UK recruiters registered a further sharp increase in overall candidate availability at the start of the year. This was despite the rate of growth easing to a four-month low. Permanent staff supply continued to rise at a slightly quicker pace than that seen for short-term workers, but both saw upturns ease since December. There were frequent reports that redundancies and a slowdown in recruitment activity had increased the pool of available workers.

Regional and Sector Variations

The latest reduction in permanent staff appointments was broad-based across the four English regions monitored by the survey. The steepest rate of contraction was seen in the Midlands, though marked falls were also recorded elsewhere.

Higher temp billings in the North and South of England contrasted with declines in the Midlands and London.

Permanent staff demand fell across just over half of the ten monitored job categories during January. The steepest rates of contraction were seen in the Retail, Construction and IT & Computing sectors. Meanwhile, the strongest rise in vacancies was signalled for Nursing/Medical/Care roles.

Of the five broad employment sectors to see firmer demand for short-term workers, Hotel & Catering and Blue Collar saw the steepest rates of vacancy growth overall. At the same time, the quickest drop in temp job opportunities was seen in the Retail sector.


Commenting on the latest survey results, Jon Holt, Chief Executive and Senior Partner of KPMG in the UK, said:

“We’re starting the year with the labour market remaining tight overall, though we are seeing the number of job seekers increasing as demand softens.

“The skills gap is part of this story. We know the UK’s ambition is for technology to drive productivity and economic growth, and yet we still face a shortfall in skilled tech talent. If the UK is serious about equipping the workforce for a modern digital economy, we need Government and business working together and investing in reskilling and upskilling.

“All eyes will now be on the Chancellor’s upcoming Budget, and while recruiters and businesses would no doubt welcome any further cuts in payroll tax costs, they will also be hoping for a bit of policy stability during an election year.”

Neil Carberry, REC Chief Executive, said:

“The labour market’s resilience is a great strength of the British economy – but it can’t last for ever without sustained economic growth. Pay has normalised, inflation is dropping and the hiring market has been cooling for a year now – it’s high time that the Bank of England starts releasing the brake pedal on our economy.

“The Chancellor has the perfect opportunity in the Spring Budget to give some clear signals on growth. A long-term plan to tackle skills and labour shortages, economic inactivity and weak productivity is essential. A Spring Budget full of practical steps on skills, welfare to work and the cost of doing business will help hugely.

“We can get the wheels of investment turning by recognising that the people stuff matters as much as capital expenditure. Investment in new industries and technologies such as green skills and AI is great and necessary, but we must get more of firms thinking about how they organise work, and how to build new skills to fuel local economies across the UK.”


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