Starting salary growth slowed for the second consecutive month in July, sinking to levels recorded in March 2021, according to the monthly UK Report on Jobs from KPMG UK and the Recruitment and Employment Confederation. Temporary wage growth was also the weakest registered in five months.
For starting salaries, the rate of growth was the slowest observed in more than four years, falling from 52.7 in June to 52.0 in July, according to the report’s Permanent Salaries Index. The Temporary Wages Index also registered a dip from 52.3 in June to 51.1 in July.
Some recruiters surveyed in the report said employers continued to offer higher salaries to attract qualified candidates, while others noted that pay has levelled off or declined in response to budget constraints and improved staff availability.
Staff availability continued to climb in July, the report added, as recruitment continues on a downward trend in the region. Recruiters signalled “stronger reductions in demand” for both temporary and permanent staff, and permanent vacancies fell at the fastest pace in five months.
The report’s main hiring measure, the Permanent Placements Index, saw permanent positions continue below the neutral level of 50 at 40 in July. Indices with a reading above 50 indicate an overall increase and below 50 an overall decrease compared with the previous month.
Moreover, temporary billings experienced the sharpest decline in six months. According to the report’s Temporary Billings Index, temporary staff rates fell from 45.5 in June to 44.6 in July.
Accordingly, staff availability continues to soar across the region and has now risen for 29 months consecutively.
Jon Holt, group CEO and senior partner at KPMG UK, said that employers will continue to postpone investments until they receive further clarification from the UK government’s Autumn budget, but an increase in candidate supply could have a positive knock-on effect for businesses in the region.
“A larger talent pool has helped temper wage inflation, which helped convince the Bank of England to cut interest rates,” Holt said. This “further loosening” of monetary policy, Holt continued, could help boost business confidence.
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