KPMG and REC, UK Report on Jobs - November 2022
Permanent placements decline for the first time since February 2021
Permanent placements decline for the first time since February 2021
Key findings
- Permanent placements fall, temp billings stagnate
- Further slowdown in vacancy growth
- Starting salary inflation slips to 18-month low
Data collected October 12-25
Summary
Recruitment activity across the UK weakened at the start of the final quarter, according to the latest KPMG and REC, UK Report on Jobs survey, compiled by S&P Global. Recruiters signalled a renewed drop in permanent placements and stagnant temp billings as heightened uncertainty over the economic outlook weighed on staff hiring. Concurrently, there was a further slowdown in rates of vacancy growth for both permanent and temporary staff.
Greater hesitancy to look for or switch roles alongside a generally low level of unemployment led to a further steep drop in the supply of workers. The sustained decline in candidate numbers and cost-of-living pressures continued to place upward pressure on starting pay. However, rates of salary inflation and temp pay growth fell to 18- and 17-month lows, respectively.
The report is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
Fresh fall in permanent staff appointments
Recruitment consultancies indicated that hiring activity waned at the start of the fourth quarter, as the number of permanent placements fell for the first time in 20 months and temp billings stagnated. Survey respondents often mentioned that heightened economic uncertainty had led some clients to reassess their recruitment plans, while candidate shortages also dampened hiring.
Permanent Placements Index
Temporary Billings
50.0 = no-change
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Vacancy growth eases again in October
Although demand for staff continued to increase in October, the rate of vacancy growth softened for the sixth month running. Notably, the upturn in demand was the weakest seen since the current period of expansion began in February 2021, with both permanent and short-term vacancies rising at slower rates.
Overall availability of staff continues to drop sharply
The total supply of candidates fell sharply once again during October, despite the rate of reduction easing fractionally to the slowest since April 2021. The decline in permanent staff availability remained more acute than that seen for temporary labour. When explaining the latest drop in candidate numbers, recruiters commented that people had become more reluctant to switch or seek out new roles due to concerns around the weaker economic outlook, fewer foreign workers and a low unemployment rate.
Starting salary inflation dips to 18-month low
Latest survey data pointed to a softening of pay pressures during October. Although sharp overall, pay awarded to new permanent joiners increased at the slowest rate for a year-and-a-half. At the same time, temp wage inflation slipped to its lowest since May 2021. According to recruiters, starting rates of pay increased due to the rising cost of living and competition for staff.
Regional and Sector Variations
Permanent staff appointments fell across all four monitored English regions in October, with London seeing the steepest rate of reduction.
The Midlands registered the quickest decline in temp billings of all four monitored English regions. Fresh falls were meanwhile seen in London and the North of England, while the South of England bucked the overall trend and recorded a marked expansion.
Slower increases in staff demand were registered across both the private and public sector at the start of the fourth quarter, with only growth of permanent positions in the public sector ticking higher. The weakest upturn in vacancies was signalled for temporary roles in the public sector, while the quickest was seen for permanent positions in the private sector.
Permanent staff vacancies continued to rise across all ten monitored job categories in October, albeit at notably weaker rates than those seen a year ago in the majority of cases. Nursing/Medical/Care topped the rankings, while Retail was placed at the bottom of the league table.
Demand for short-term staff continued to rise across all ten monitored job categories at the start of the fourth quarter. Nursing/Medical/Care, Hotel & Catering and Retail registered the strongest increases in temporary vacancies, while Executive/Professional saw the slowest.
Comments
Commenting on the latest survey results, Claire Warnes, Partner, Skills and Productivity at KPMG UK, said:
“The looming recession is clearly impacting the UK jobs market. Employers’ caution in hiring combined with fewer available candidates has resulted in the number of permanent placements falling for the first time in nearly two years. Now more than ever, it’s essential that we focus on upskilling the workforce to support and boost economic recovery when it comes. The jobs market will bounce back, particularly if we invest in the skills of the workforce across all sectors of the economy.”
Neil Carberry, Chief Executive of the REC, said:
“The economic and political uncertainty of September and October has caused employers to become more cautious in their approach to hiring than during the frenzy of earlier in the year. Decision-making timelines for permanent hires have extended, for instance. But vacancies and pay are still rising, temporary worker demand is high, and permanent hiring has fallen for the first time in almost two years. Activity, overall, is still well in advance of pre-pandemic levels. We will need to watch how this story develops over months to come, but so far this data suggests heightened employer caution, not a retreat from the market.
“It remains the case that firms in many sectors are struggling to hire, as hours worked remain below their pre-pandemic level despite record-low unemployment. We’re looking to the Autumn Statement later this month to help with removing the brakes on growth by reforming the apprenticeship levy to build a more effective skills system, improving support to help people move from inactivity to work, and align other policy areas – like work permits – with a growth strategy.”
Contact
KPMG Chris Mostyn Deputy Head of Media Relations T: +44 (0)7512 448000 |
REC Shazia Ejaz Director of Campaigns T: +44 (0)20 7009 2157 |
S&P Global Annabel Fiddes Economics Associate Director S&P Global Market Intelligence T: +44 (0)1491 461 010
Sabrina Mayeen Corporate Communications S&P Global Market Intelligence T: +44 (0) 7967 447030
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Methodology
The KPMG and REC, UK Report on Jobs is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.
Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.
For further information on the survey methodology, please contact economics@hismarkit.com.
Full reports and historical data from the KPMG and REC, UK Report on Jobs are available by subscription. Please contact economics@hismarkit.com.
About KPMG
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff. The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.
KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.
About REC
The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for their candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy. Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.
About S&P Global
S&P Global (NYSE: SPGI) S&P Global provides essential intelligence. We enable governments, businesses and individuals with the right data, expertise and connected technology so that they can make decisions with conviction. From helping our customers assess new investments to guiding them through ESG and energy transition across supply chains, we unlock new opportunities, solve challenges and accelerate progress for the world.
We are widely sought after by many of the world’s leading organizations to provide credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help the world’s leading organizations plan for tomorrow, today. www.spglobal.com.
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