Latest KPMG and REC UK Employment Report: London survey finds recruitment activity fell across the capital at the start of the year as economic uncertainty made it difficult for employers to commit to new recruitment. .
Permanent job openings have fallen significantly as recruiters report that demand for talent is weak and candidates are hesitant to seek new job opportunities.
Additionally, a new decrease in one-time claims was recorded during the latest period under review. At the same time, the number of permanent job openings continued to decline and the pace accelerated, while temporary job openings continued to increase.
Finally, starting salary inflation accelerated slightly over the month as companies sought to attract workers with the right skills to counter inflation.
The KPMG and REC UK Employment Report: London was compiled by S&P Global from responses to a survey sent to around 100 recruitment and employment consultancies in London.
Significant decrease in permanent job openings
Survey data from January revealed that the number of full-time staff appointments across the Tokyo metropolitan area has declined for 16 consecutive months. The pace of contraction accelerated from December and was rapid overall. It is said that fewer vacancies and candidates’ reluctance to transfer are weighing on recruitment efforts.
The number of full-time job openings decreased at the same pace at the national level. The number of permanent staff appointments also fell during January in three other UK monitored areas.
Following a modest increase in December, the London-based recruitment agency recorded another decline in claims for agency workers in January. The decline was the most significant in nearly three years, and the overall trend was solid. My bill has decreased in two of the past three months.
Furthermore, the fall in temporary agency claims across London was higher than the UK-wide average. The only other region of England to report a fall was the Midlands. Meanwhile, both the north and south of England recorded solid increases in claims.
Demand for permanent jobs in London worsened in January, extending the current decline to 11 months. The rate of contraction accelerated from December onwards, with a firmer and steeper contraction than the national trend. The south of England, along with London, was the only UK region monitored to record a decline in the number of permanent job vacancies.
In contrast, demand for short-term staff improved across the metropolitan area in January for the fourth straight month. Growth in agency vacancies was strong overall and faster than the UK average. Meanwhile, the south of England became the only region in the UK to record cold job openings for the second month in a row.
Growth in the supply of full-time employees has slowed, but remains significant
As with each month from December 2022 onwards, London recruiters saw an increase in vacancies for permanent candidates in January. Although each seasonally adjusted index fell to a four-month low, the overall number of permanent candidates showed a significant increase. The recent turnaround was partly related to layoffs.
All four UK regions monitored recorded increases in the supply of permanent jobs in January, with London leading the expansion. The slowest improvements were recorded across the north of England, but here too the overall rate of increase was rapid.
The number of temporary candidates rose rapidly across London during January, with the growth noted in each of the past 13 months. The growth rate has accelerated since December and is well above the long-term average. Panelists noted that the supply of temporary candidates has increased due to reduced hiring activity and increased preference for temporary positions.
Of the four UK regions monitored, London recorded the strongest increase in the supply of agency workers for the third consecutive month. The north of England showed the weakest growth in temporary candidates at the start of the year.
Sustained increase in full-time employee salaries
Full-time new employees across London received a significant pay rise in January. Inflation has accelerated since December and was the strongest of the four UK regions monitored. Recruiters noted that salaries continue to trend upward as clients seek quality talent as the cost of living continues to rise.
Starting salaries rose at a stronger pace in January in all four of the UK’s monitored regions, with the exception of the Midlands.
Temporary wages also rose in the capital earlier this year. Although steady, the pace of inflation was about the same as in December and slightly slower than historical trends. Notably, casual wages increased at a faster pace across the UK.
Of the four UK regions monitored, the south of England had the biggest rise in casual pay, while the north of England had the lowest.
Anna Purchas, senior partner in KPMG’s London office, said: January is traditionally the busiest month for recruiters, but as tough economic conditions continue to reduce the number of full-time employees available and slow growth in the available talent pool, employers and job seekers are taking a very cautious approach to hiring.
“Starting salaries for candidates in highly skilled roles remain on the rise, but companies face many cost challenges and are struggling to balance between attracting new talent and retaining existing employees with raises. Walking a fine line.
“With recruitment currently stagnant, employers who want to minimize talent loss from their operations may need to reskill existing staff, offer flexible benefits, or We need to focus on considering work-life balance policies.
“London’s current job market remains volatile, requiring recruiters and employers to think more creatively about how to attract and retain permanent staff to provide stability.
“As we celebrate Apprenticeship Week, taking on an apprentice is also a cost-effective way to tackle skills gaps, develop talent and develop the motivated and qualified workforce we need most. Employers who exercise caution and continue to invest, especially in skills, are likely to benefit most when the economy improves.”
REC chief executive Neil Carbery said: “Labor market resilience is a major strength of the UK economy, but without sustained economic growth it cannot last forever.”
“London payments are moving towards something more semblance of pre-pandemic normality, and that applies to the UK as well. And over the past year, as inflation has fallen and the jobs market has cooled, the Bank of England has It’s time to start loosening the economic brake pedal.
“The Chancellor has a great opportunity to give a clear signal on growth in his Spring Budget. A long-term plan to tackle skills and labor shortages, economic slowdown and falling productivity is essential. Skills, Packed with practical measures on working benefits and the costs of doing business, the Spring Budget will be of great help.
“We can get the wheels of investment turning by recognizing that people’s material needs are just as important as capital investment. Investment in new industries and technologies such as green skills and AI is great and necessary, but We need more businesses to think about how they organize and build new skills to boost local economies across the UK.”