Recruitment Outlook Report – January 2024

Looking at the most recent Report on Jobs from KPMG and the REC, the latest recruitment market landscape continues to show a mixed picture. Overall, the UK continues to show remarkable resilience in the face of economic pressures. Within this, we can see how employers are largely continuing to hold fire on permanent hiring as they wait for confidence to rebuild, and as such in the private sector, demand for temps is strong.

Let’s take a closer look.

Employers take a cautious approach to hiring

When there are wider uncertainties, employers face a quandary: talent is expensive, but it’s needed to underpin business success. The latest data reveals another drop in hiring activity at the start of 2024. This was expected in the current climate.

However, we need to unpick the data because while the number of people being placed in permanent jobs continues to fall, successful businesses take a savvy approach. Employers are turning to temps to manage their talent needs. The rate of reduction in using temps is now the softest seen since October, and indeed, in the North of England, we’ve seen some growth. It’s also likely that any hiring freezes will be reviewed following the spring budget.

This means there’s a drop in the number of vacancies

As expected, the above also impacts the number of vacancies. Given we had experienced painfully high numbers of vacancies, with staff shortages posing significant problems for many, this isn’t a bleak picture. The drop in vacancy numbers was only marginal in January but is on the back of a trend spanning the last 5 months. Again, it’s important to note that the number of temporary job vacancies continues to grow. This is particularly true in the private sector.

However, it’s important to drill down into your specific industry here. For example, vacancy numbers in engineering remain notable.

Salary inflation is easing

In what’s been an intense time for employers, starting salary inflation is finally starting to ease. It’s still sharp, but the latest data on starting pay shows it is the softest rate recorded since March 2021 and below average overall.

With the differences in demand and vacancy numbers for permanent versus temporary roles, temporary wage growth continues apace. It’s now at a 5-month high. Nonetheless, it’s still below the historical trend.

Candidate supply continues to increase

Other good news for employers is that candidate supply continues to increase. The rate of growth has eased to a four-month low, but for employers who’ve struggled in a tight labour market to find the best staff, options are increasing.

Mirroring the pattern of reduced permanent vacancies and more interest in temps, permanent staff supply continues to rise at a slightly faster pace than for temps. We’ve now seen eleven months of growing candidate pools. As redundancies continue in the midst of economic uncertainty, this is a picture we’d expect.

Again, we need to look at the regional picture. The availability of temporary candidates in the North of England is growing more slowly than it is elsewhere.

It’s an interesting time for employers. With growing candidate supply, there are excellent opportunities to find the talent you need to secure your business. However, it remains a time of caution regarding hiring decisions overall. The best way to feel more secure in your recruitment plans is to partner with experts who understand the market, your region, and your industry.

Get in touch with us at F1rst Commercial Recruitment for your office recruitment needs on: 0161 359 3111, or First Executive Recruitment for your leadership recruitment needs on: 07775 700707.

We publish an overview of the REC/KPMG Jobs Outlook Report each month to keep you up to date with the UK recruitment and jobs market month by month. 

Contact us today if you need specialist support to secure your future senior level workforce in engineering and manufacturing. 

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