Report on jobs: Pay pressures ease only slightly amid rising living costs
The latest KPMG and Recruitment and Employment Confederation (REC) ‘UK Report on Jobs’, compiled by S&P Global, reveals a muted confidence around the economic outlook is driving a steeper drop in permanent placements.
The KPMG and REC report provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by UK recruitment consultancies and employers to provide the first indication each month of labour market trends.
Key findings of the report reveal that; hiring activity across the UK continued to be dampened by a weak economic outlook and reduced confidence among businesses and permanent placements contracted at the quickest rate for just over three years, while temp billings growth weakened notably from June.
The overall availability of staff increased at a substantial pace amid the slowdown in recruitment and reports of redundancies. The latest upturn in total labour supply was the steepest recorded since October 2009 when excluding the pandemic period. While there were signs of pay pressures moderating again in July, permanent salaries continued to rise at a sharp pace overall. Total vacancy growth meanwhile slowed further, hitting a 29-month low in July.
A weaker economic climate and reduced market confidence weighed on recruitment activity during July, according to the data. Permanent staff appointments declined at the steepest pace for just over three years, as concerns over the outlook made clients hesitant to commit to new staff. Concurrently, growth in temp billings edged down to a fractional pace that was the slowest recorded since last October.
The survey cites faster increases in the supply of both temporary and permanent workers drove the sharpest upturn in overall labour supply since December 2020.
Competition for skilled candidates and the increased cost of living placed pressure on rates of starting pay during July. Salaries for newly-placed permanent workers rose sharply – despite the rate of inflation slipping to the lowest since April 2021. Temp pay increased at the softest pace in 29 months, albeit solidly overall.
Growth of demand for staff continued to moderate at the start of the third quarter. Total vacancies increased at the slowest pace in 29 months. The latest upturn in demand for permanent workers was the weakest seen over the current period of recovery that began in March 2021. Concurrently, the rate of short-term vacancy growth was among the slowest recorded over the past three years.
All four monitored English regions posted a decline in permanent placements, led by London. Divergent trends were seen for temp billings, which rose in the Midlands and London but fell in the North and South of England.
Hotel & Catering saw the steepest upturn in demand for temp workers of all 10 categories in July. Strong rates of vacancy growth were also noted for Engineering and Blue Collar personnel. The Construction and Secretarial/Clerical sectors saw modest drops in demand.