KPMG and REC, UK Employment Report – July 2024

Steady wage inflation accelerates to eight-month high

Amid reports of a shortage of suitable candidates, as well as recognition of ongoing pressure on the cost of maintaining staff, salaries for permanent workers rose again in June. Inflation was also the highest recorded in the survey since October last year. The wages of temporary workers also rose, although at the weakest rate in three months.

Demand for workers is falling slightly

Overall demand for workers continued to fall in June, extending the current downturn to eight months. The pace of decline was somewhat steeper compared with May, though it remained modest overall. The decline was also largely concentrated in permanent workers, as the number of temporary vacancies rose — albeit slightly — for the first time since January.

Second fastest increase in worker availability since November last year

The availability of candidates to fill positions continued to rise in June, extending the current period of growth to 16 months. The availability of permanent and temporary workers increased sharply, although in each case to a lesser extent than in May. Recruitment consultants said the recent increase in staff supply reflected a combination of layoffs, slower client decisions and fewer vacancies.

Regional and sectoral differences

The reduction in placements was seen across England, although to varying degrees. The largest reduction was seen in southern England, while the Midlands saw only a marginal reduction.

An increase in temporary bills was seen in the Midlands and northern England. While declines continued to be reported in southern England and London.

The survey, conducted in June, found that six of the ten broad sectors saw a fall in demand for permanent staff. Secretarial/office saw the biggest reduction, followed by IT and Computing. However, there was a strong increase in demand in Engineering.

According to permanent staff, temporary job openings fell across six broad categories in June. The largest decline was in IT & Computing. Where there was growth, Engineering led the way, followed by Blue Collar.

Comments

Commenting on the latest survey results, Jon Holt, CEO and Senior Partner of KPMG in the UK, said:

“Despite strong national employment data, the latest survey results show that employers are continuing to put the brakes on recruitment as the general election period creates uncertainty. Permanent employment has been particularly hard hit as firms either delay or focus on temporary appointments. This lack of demand means that competition for the few available roles continues to drive up wage growth.

“The UK economic outlook shows signs of recovery, with overall inflationary pressures easing and consumer confidence rising, and we expect interest rate cuts in the coming months.

“Our economy is slowly recovering and a key task for this new government is to deliver fiscal policy that both improves long-term macroeconomic conditions and creates stability. This will boost confidence in business investment in the UK – helping to accelerate growth, including in the jobs market.”

Neil Carberry, Chief Executive of REC, said:

“Recruiters are reporting that firms have delayed some permanent hiring decisions during the election campaign. Now that a new government has been elected, recruiters are expecting this investment to be unlocked. The return of demand for temporary workers into positive territory, driven particularly by the Midlands and North, is a sign that the mild recovery of the last few months is still with us, despite the political noise. As political uncertainty eases and interest rates fall, we expect permanent employers to return to the market this summer.

“The incoming government has made it clear that growth and prosperity will be their primary focus. But only business can deliver this – partnership is essential. Working with business to ensure the new deal for workers is delivered in a way that businesses can embrace and that supports the agility that workers and employers need is key. As is reforming the flawed Apprenticeship Tax. There can be no effective industrial strategy that does not have a robust workforce strategy at its heart.”