Recruitment rates fell in December in the UK as employers took a cautious approach to hiring amidst ongoing economic uncertainty. Little movement in starting salary rates for UK workers reflects a region-wide shortfall in qualified talent, according to the latest UK Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC).
The latest survey report revealed a further drop in hiring activity at the start of 2024, particularly for permanent workers, the report said. Demand for permanent staff weakened for the fourth time in five months.
Temporary billings are also in slight decline but at a less “sharp and accelerated pace” than permanent staff appointments, the report said. Overall, demand is low and vacancies fell for the third month running.
The report, compiled by ratings firm S&P Global, includes responses collected in December from around 400 UK recruitment and employment consultancies.
Alongside recruitment concerns, salary rates are struggling to keep pace with inflation. The report’s Permanent Salaries Index scored pay growth in the UK for January at 55.8, beneath the historic average of 57.4 and the softest since March 2021.
A higher cost of living and competition for skilled workers have placed further pressure on starting salaries, the report said. The Temporary Wages Index pointed to an increase in average pay rates for short-term staff for the 35th month in a row in January, the report said. Recruiters report wages increased to attract and secure suitably skilled workers.
Jon Holt, chief executive and senior partner at KPMG in the UK, said that finding skilled workers to fill positions is necessary for the UK economy.
“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,” Holt said in the report. “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.”
Sectors in short supply of skilled workers, both permanent and temporary billings, include the accounting and financial sector, blue collar industry, and IT and computing, among others.
Neil Carberry, REC’s chief executive, recommended that the UK Spring Budget provide practical steps on skills, welfare to work, and the cost of doing business.
“A long-term plan to tackle skills and labour shortages, economic inactivity, and weak productivity is essential,” Carberry said in the report. “We must get more firms thinking about how they organise work and how to build new skills to fuel local economies across the UK.”
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