December 2024 UK Labour Market Report: Rising Payroll Costs Challenge Recruitment

Stay ahead of the latest developments in the UK labour market with the KPMG and REC's UK Report on Jobs, featuring exclusive insights from recruitment consultancies like Redline Group. This comprehensive monthly report provides a detailed analysis of key UK workforce dynamics. Below are the critical findings from November 2024 survey data.

Key Highlights from November 2024 Report:

• Vacancies: Declines in both permanent and temporary/contract vacancies persist.
• Staff Availability: Candidate availability continues to rise.
• Salary/Pay Rates: Modest increases in both salary increases for skilled candidates and contractor/temporary pay rates.

Labour Market Insights

The November report reflects a shifting job market grappling with the effects of the recent Budget. Hiring activity has slowed significantly, with permanent placements experiencing their sharpest decline in over a year, and temporary roles seeing reduced demand.

While rising taxes and escalating business costs have prompted some companies to pause hiring, the engineering sector remains resilient. Jon Holt, Group Chief Executive and UK Senior Partner KPMG, noted: “Businesses are having to weigh up the prospect of increasing costs following the budget, which has led to an accelerated slowdown in hiring activity across the board. This slowdown, alongside a growing availability of candidates in the market, could put more downward pressure on wage inflation, which largely remained unchanged on last month’s 44-month low.”

Many respondents signalled that the government Budget in late October had led to uncertainty and the reassessment of staffing needs.

Sector-Specific Insights

• Permanent Placements: Decline in hiring due to cautious business sentiment.
• Engineering & Tech: Demand remains strong, with skill shortages in areas like Electronics, Software, Full Stack, AI, Data Science, and QA automation.
• Salaries: Modest growth in starting salaries and contract pay rates, despite rising candidate availability.

Market Statistics

The Office for National Statistics reported 831,000 UK job vacancies for August–October 2024, a decrease of 4.0% (35,000 vacancies). However, vacancies remain 4.4% above pre-pandemic levels.

Most sectors saw vacancy reductions, except for professional, scientific, and technical activities, and public administration and defence, which remain significantly above pre-2020 levels.

Future Outlook:

Neil Carberry, REC Chief Executive, summed up the report, stating: “It should not be a surprise to no-one that firms took the time to re-assess their hiring needs in November after a tough Budget for employers. The drop in vacancies was led by private sector permanent roles, and slower permanent roles, and slower permanent recruitment billings across the month also reflected this trend. The real question now is whether businesses will return to the market as they go into next year with greater certainty about the path ahead. The resilience of temporary recruitment offers some hope."

Martin Crapper, Managing Director of Redline Group commented:

“We recognise the wider-economic uncertainty and effects of recent events, and it naturally bleeds into the niche sector of Electronics and high-technology in which Redline specialises, but our experience of demand, and engagement, from clients remain very robust. Quarter on quarter we are experiencing an INCREASE in role registrations from clients. Coupled with an increase in interview activity, this confirms their needs IS real and they are investing both time and resources in hiring key professional Contract and Permanent staff across R&D/Engineer, Sales/Marketing and Manufacturing/Operations roles. Our booked revenues for Jan, Feb, Mar are already significantly ahead of the last 4 previous quarters, and we are encouraged by feedback from clients on their 2025 hiring plans and goals.”

At Redline Group, we change lives every day, building world-class teams for technology companies. As one of the UK’s most trusted recruitment specialists in Electronics and High Technology, we offer expert solutions for professional Contract, Permanent, and Executive positions. With four decades of experience, we are perfectly positioned to future-proof your hiring needs.

For more information about this month’s report or tailored recruitment advice, contact info@redlinegroup.com or call 01582 450054.