Recruitment is still on the back burner for employers in the UK as they grapple with an uncertain economic outlook, leading to the sharpest increase in labour supply in four months, according to the UK Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC).
The latest survey report reveals a rapid and accelerated increase in the availability of staff in March, following hiring freezes and higher volumes of redundancies across sectors.
Permanent staff demand continued to fall at a noticeably faster rate than for temporary workers, which again fell only marginally, the report said. However, it was the fifth successive month in which a reduction in billings from the employment of short-term staff has been registered.
Because of slow hiring in the UK, candidate supply has increased at the steepest pace for four months, the report said. The Total Staff Availability Index was 60.2, up from 57.3 in February, pointing to the strongest rise in staff availability since last November.
This marks the fifth consecutive monthly decline in demand for staff, the report said. The Total Vacancies Index was 47.2, up only slightly from February’s 37-month low of 46.9.
While permanent billings in the public sector experienced a stark decline, the report said, the sector observed the steepest decline in temporary vacancies since July 2020. Retail has seen the sharpest fall in demand in both permanent and temporary vacancies, the report said. For permanent vacancies, recruitment activity has also fallen in the IT and Computing sector.
Cost-cutting measures from companies across the region have contributed to a further decline in recruitment activity, the report said, and budget constraints are top of mind for employers.
These measures continue to reflect on pay, with starting salary rates showing a slow increase. Overall, permanent staff salaries rose at the weakest rate in over three years, the report notes. Temporary workers also had the slowest increase in pay in four months.
“Starting pay levels for both permanent and temporary workers continued to increase during March. Higher pay generally reflected efforts to attract better candidates,” the report said, with skill shortages across sectors consistent with the previous month. “However, amid an upturn in candidate supply, rates of pay growth continued to slide.”
Neil Carberry, the REC’s chief executive, said that this data signals that companies are holding back on investment in the UK, as employers wait for inflation and interest rates to ease.
“The decline in permanent placements has been steady for some months now, with temporary recruitment still robust, if falling back from the record highs of [2022 and 2023],” Carberry said in the report. “Employers appear to be leaning on temporary work while they are uncertain about the path of the economy.”
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