Uncertainty in the UK Job Market Leads to Decrease in Permanent Placements
A recent survey conducted by KPMG and the Recruitment and Employment Confederation (REC) has revealed that employers in the UK are hesitant to hire new permanent staff due to concerns about the country’s economic outlook. The poll, which involved 400 recruitment agencies, found that 43% of them experienced a decline in permanent hires in July. This decline represents the fastest rate of decrease in new recruits in the past three years.
The survey also highlighted a rise in the number of available job candidates, while the total number of vacancies increased at the slowest pace in 29 months. This indicates that businesses are still freezing hiring and implementing redundancies, resulting in a significant increase in labor supply since December 2020.
Claire Warnes, a representative from KPMG, compared the current situation to the summer weather, stating that it is “damp, but with some possible bright skies on the horizon.” She explained that clients are not confident enough in the economic outlook to commit to permanent hires, leading to the sharpest decline in placements since June 2020. While this may be good news for recruiters who have a larger pool of candidates to choose from, the slow growth in the number of available vacancies creates an imbalance between supply and demand.
The survey also revealed that salaries for those who managed to secure new permanent jobs have risen sharply. This increase can be attributed to competition for skilled candidates and the rising cost of living. Neil Carberry, the CEO of REC, emphasized that while the overall job market remains fairly robust, there is a sense that the economy needs to experience growth soon to sustain this positive picture. He noted that permanent hiring has been slowing throughout the year, partly due to the normalization after the post-pandemic boom and partly due to uncertainty.
Despite the slowdown in permanent placements, the job market in the UK is still at a good level, with vacancies and pay continuing to rise and unemployment remaining low. However, certain sectors, such as hospitality and construction, are facing significant labor shortages.
Overall, the survey highlights the cautious approach of employers in the UK job market due to uncertainty about the country’s economic future. This hesitation has resulted in a decline in permanent placements and an increase in labor supply. While the job market remains relatively strong, sustained growth is needed to maintain this positive trend.