Feb 2024 Report on Jobs: Starting Salary Inflation Normalises

Discover the latest insights into the UK labour market with the KPMG and REC, UK Report on Jobs, featuring exclusive data from recruitment consultancies, such as Redline Group. The comprehensive guide draws on original survey data, providing a monthly snapshot of labour market trends.  Here are the main findings from January’s data.

Key Findings from the February Report:

• Overall candidate availability increased significantly.
• Starting Salary inflation experienced its softest increase since March 2021.
• Total Vacancies saw a marginal decline.
• UK Unemployment decreased to 3.8%

Market Overview:

In January, total vacancies slightly decreased, while candidate availability surged. Budget constraints limited pay increases, resulting in notable but soft starting salary inflation.  Temporary/Contract wage growth, although slightly accelerated, remained below historical trends.

Placements Decline Marginally Due to Hiring Freezes:

The UK witnessed a decline in placements for permanent job roles at the beginning of the year. This being attributed to a reduction in hiring since October 2022. Temporary/Contract billings experienced only marginal reduction. Speaking about this, Jon Holt, Chief Executive and Senior Partner of KPMG in the UK, said: “We're starting the year with the labour market remaining tight overall, though we are seeing the number of job seekers increasing.”

Despite a 49,000 drop in open roles over the last three months, the number of unfilled job roles remained over 100,000 higher than pre-pandemic levels, totalling 934,000, seen just prior to the pandemic.

The ONS estimated number of workforce jobs for September 2023 (next updated March 2024) was a record 36.8 million. The estimated number of workforce jobs is 1.1 million above its December 2019 pre-coronavirus (COVID-19) pandemic level.

Employment Categories and Skills in Demand:

Over half of the ten monitored employment categories showed increased demand for permanent workers in January. Engineering saw significant rises in both permanent and contractor/temp staff demand. Skills shortages were identified in specialist areas such as Electronics, Mechanical, Manufacturing Engineering, RF, Software Development, IT Systems Administration and Service Engineering, along with AI Developers and Cyber Specialists.

Budgetary Pressures Impact Salary Inflation:

At the start of 2024, average salaries awarded to new permanent joiners continued to rise, though the rate of pay growth was the softest since March 2021. Contract/temp pay, whilst solid, experienced slower growth than the historical average.

Neil Carberry, REC Chief Executive, spoke about the matter: “The labour market’s resilience is a great strength of the British economy - but it can’t last for ever without sustained economic growth. Pay has normalised, inflation is dropping, and the hiring market has been cooling for a year now - it’s high time that the Bank of England starts releasing the brake pedal on our economy.”

Final Word:

Neil Carberry summed up the discussion by saying:

“The Chancellor has the perfect opportunity in the Spring Budget to give some clear signals on growth. A long-term plan to tackle skills and labour shortages, economic inactivity and weak productivity is essential. A Spring Budget full of practical steps on skills, welfare to work and the cost of doing business will help hugely. We can get the wheels of investment turning by recognising that the people stuff matters as much as capital expenditure. Investment in new industries and technologies such as green skills and AI is great and necessary, but we must get more of firms thinking about how they organise work, and how to build new skills to fuel local economies across the UK."

Redline Group changes lives every day, building world-class teams for technology companies. We continue to be one of the UK’s most trusted Electronics and High Technology recruitment specialists for professional Contract, Permanent, and Executive positions. With four decades of experience our enthusiastic, knowledge-led people create trusted recruitment solutions. Redline is perfectly positioned to offer advice about future-proofing your permanent, contract and interim needs in the technology sector.  

For more information about this month's report, contact David Collins on DCollins@RedlineGroup.com or call him at 01582 878804.