Jo Thompson Recruitment contributes to the Report on Jobs, a comprehensive guide on the UK labour market that is drafted by KPMG and the Recruitment & Employment Confederation (REC), compiled by IHS Markit. The monthly report is built upon survey data from recruitment consultancies and employers, who share insights on the latest and most pressing labour market trends for the UK.
In the latest UK Report on Jobs, the REC, KPMG, and IHS Markit recorded that temp billings expand at quickest rate in seven months, permanent placements drop at steeper pace and starting pay inflation still remains sharp.
Commenting on the latest survey results, Claire Warnes, Partner, Skills and Productivity at KPMG UK, said:
“The preference for hiring short-term staff continued unabated into April. Businesses remain cautious about committing to permanent hires in the face of ongoing economic uncertainty, which led to the quickest increase in temporary billings for seven months.
“Recruitment freezes and candidates lacking the right skills were also cited as causing this divergence, with permanent staff appointments contracting at the fastest rate in two years.
“For businesses looking to hire there are some green shoots in candidate availability, as supply improved for the second month in a row. Starting rates of pay for both permanent and temporary positions are still rising at historically sharp rates, giving people an incentive to move roles.
“But skills shortages still dominate the market with no signs of progress. Government and businesses must do more to avert this skills crisis.”
Neil Carberry, REC Chief Executive, said:
“This data shows how uncertain many employers are feeling right now. The good news is they still need to hire, as growing vacancies show. But firms are hedging their bets. After a better month in March, in April we saw permanent hiring fall back quickly and businesses turn to temps to help them through. London had a particularly difficult month.
“The picture varies for temporary recruitment too, with REC members reporting weaker demand in some sectors than others as sectors like logistics, driving and food are heavily affected by changing consumer behaviour. Taken together, however, there is still plenty of opportunity out there for jobseekers. Wages are rising strongly for both temps and new permanent hires in the face of inflation, even though candidate availability is finally starting to improve. “For employers, hiring is unlikely to get easier soon.
Those businesses that succeed will have good, long term strategies for accessing talent from a wide range of sources, including retraining. Recruiters are well-placed to help with this. Nowhere is the need for a strong hiring strategy more obvious than in our largest employer, the NHS, where the failure to partner properly with NHS staffing suppliers is lengthening waiting times and costing the public purse more than necessary. Reforming NHS frameworks in partnership with the industry would be in the interests of patients, medical staff and the taxpayer.”
Executive Summary
The Report on Jobs is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.
The main findings for April are:
Temp billings growth quickens, but permanent staff appointments fall again
UK recruitment consultancies signalled a further shift in hiring preferences from permanent to temporary workers amid lingering economic uncertainty around the outlook and rising costs in April. Notably, permanent placements fell for the seventh month in a row, and at the quickest rate since the start of 2021. In contrast, temp billings expanded solidly, with the rate of growth the fastest for seven months.
Supply of workers improves for second month running
April data pointed to a sustained improvement in the availability of candidates. The rate at which labour supply improved quickened slightly on the month but remained modest overall. Underlying data showed that a slightly faster rise in permanent candidate numbers contrasted with a softer upturn in temp staff availability. Recruiters often linked higher staff supply to redundancies and workers looking for better paid roles amid the rising cost of living.
Stronger increases in starting pay
Starting salaries for permanent workers continued to rise at a historically sharp pace in April, with the rate of inflation picking up to a four-month high. At the same time, temp wage growth improved to the highest since January. Higher rates of starting pay were frequently attributed to efforts to attract and secure suitably skilled staff and bumps to pay to reflect the higher cost of living.
Vacancy growth slips to three-month low
Although demand for staff continued to rise in April, the overall rate of vacancy growth slipped to a three-month low and remained weaker than the series long-run average. The softer upturn in demand was largely driven by a slower increase in permanent vacancies, as the number of temp roles increased at a sharper pace.
Focus on the South of England – Temp billings growth quickens to six-month high
In the latest UK Report on Jobs, the REC, KPMG, and IHS Markit recorded a sharper increase in temp billings, but recruiters signal fresh fall in permanent placements. Starting salary inflation accelerates to five-month high.
Commenting on the latest survey results, Ian Brokenshire, Senior Office Partner at KPMG UK in the South West, said:
“The sustained growth in temporary billings in the South during April, partnered with the region achieving the lowest unemployment rate in the latest ONS figures, is a positive sign that confidence in the region’s economy is growing. Recruiters cited a lack of suitably-skilled candidates as one of the reasons for the slight decline in permanent placements which inevitably will have resulted in stronger demand for temp workers who can command higher rates of pay. Employers see this as an opportunity to improve retention rates by providing employees with a wider range of development opportunities, allowing them to upskill and improve pay.”
Neil Carberry, REC Chief Executive, said:
“This data shows how uncertain many employers are feeling right now. The good news is they still need to hire, as growing vacancies show, with growth of demand for permanent workers across the South of England remaining strong in April. And temporary vacancies across the region meanwhile rose at a solid and accelerated pace.
“Across the UK, REC members reporting weaker demand in some sectors than others as sectors like logistics, driving and food are heavily affected by changing consumer behaviour. Taken together, however, there are opportunities out there for jobseekers. Wages are rising sharply for both temps and new permanent hires in the South in the face of inflation, even though candidate availability is finally starting to improve.
“For employers, hiring is unlikely to get easier soon. Those businesses that succeed will have good, long term strategies for accessing talent from a wide range of sources, including retraining. Recruiters are well-placed to help with this. Nowhere is the need for a strong hiring strategy more obvious than in our largest employer, the NHS, where the failure to partner properly with NHS staffing suppliers is lengthening waiting times and costing the public purse more than necessary. Reforming NHS frameworks in partnership with the industry would be in the interests of patients, medical staff and the taxpayer.”
Special Feature
This section features data from the Recruitment and Employment Confederation
Labour market improves but skills shortages still dominate
In spite of the uncertain economic outlook, the UK labour market continues to perform strongly with employment rising and unemployment remaining low. But while the workforce has expanded in recent months, the labour market remains tight as demand for staff stays above pre-pandemic levels, suggesting that employers are still finding hiring difficult.
Similar to last month, the latest data from the Office for National Statistics (ONS) showed some improvements in workforce participation. The employment rate in December 2022 to February 2023 improved by 0.2% and the economic inactivity rate decreased by 0.4% compared to the previous rolling quarter. With the unemployment rate remaining broadly flat, the UK’s labour market continues to show signs of recovery.
However, other data from the ONS points to the persisting challenges of the current labour market.
Although the number of vacancies fell on the quarter for the ninth consecutive period in January to March 2023, it still remained 304,000 above the January to March 2020 pre-pandemic levels.
Similarly, total hours worked increased in December 2022 to February 2023, but remained 1.7 million below the December 2019 to February 2020 pre-pandemic levels. In addition, the number of people who are economically inactive remained 0.9% higher than before the pandemic, and economic inactivity due to long-term sickness rose again to a record high in December 2022 to February 2023. Major issues in the labour market still need to be resolved.
As the Institute of Employment Studies comments, progress in the labour market is painfully slow and many of those who are most disadvantaged are struggling to get into work even as the economy continues to create jobs. The defining features of the UK’s labour market are still skills shortages and economic inactivity. Addressing these will be vital to increase productivity and economic growth.
The recent Spring Budget was right to put the challenge of labour availability at the heart of the UK growth story. But a lot more needs to be done to ensure sustainable growth, especially in skills reform and supporting those who want to work to return to the workforce. The REC has been campaigning for a more flexible immigration system and more flexibility in the use of the apprenticeship levy funds to help fill the skills gaps. From healthcare to childcare to flexible working, businesses and Governments also need to be working together to boost labour supply.
At Jo Thompson Recruitment, we communicate seamlessly with hiring managers, fuel collaboration by sharing information and insights. Hiring managers are time-poor, so providing pre-qualified candidates with data driven insights and creating the resilient, agile and diverse workforce you need to succeed is a major win.
We can support you to refine your data-driven recruitment strategy and tailor your approach to each target audience. Help you make informed talent decisions around diversity and hidden talent pools. To discuss how Jo Thompson Recruitment can assist you with your resourcing needs, please email us at info@jtrltd.com or give us a call at 01635 918955 for further details.