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January 2025 UK Labour Market Report: Vacancies Fall but Permanent Salaries Increase

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Stay informed about the latest developments in the UK labour market trends with the KPMG and REC's ‘UK Report on Jobs’, featuring exclusive insights from recruitment consultancies, such as Redline Group. This comprehensive monthly report provides in-depth analysis of key UK workforce dynamics, helping businesses and professionals navigate the evolving employment landscape. Here’s a breakdown of the highlights from the January 2025 findings:

Key Highlights from December 2024 Data:

  • Vacancies: Decline in both permanent and temporary/contract vacancies.
  • Staff Availability: Candidate availability continues to rise.
  • Salary/Pay Rates: Accelerated growth in permanent salaries for skilled candidates and contractor/temporary pay rates.

Labour Market Insights

The UK labour market is experiencing a period of adjustment as businesses manage higher employment costs, slower interest rate cuts, and rising inflation. But there’s a silver lining. Salary inflation is at its steepest in four months, indicating that companies are still willing to pay for top talent, Jon Holt, Group Chief Executive and UK Senior Partner KPMG, noted: “As we start the new year, it’s a muted one for the UK jobs market. December’s data shows weakening demand causing the largest contraction in vacancies since mid-2020, coupled with hiring intention declining.

The hiring market could continue to show signs of caution in the short-term, as businesses pause to take stock of higher employment costs, a more gradual pace of interest rate cuts and rising inflation.

However, as 2025 progresses and UK economic growth picks up, businesses will need to attract top new talent. Salary inflation being at its steepest in four months shows they are still willing to compete for it. “

Sector-Specific Insights

  • Engineering & Tech: Ongoing skills shortages in critical areas like Electrical Engineering, Software Development, Artificial Intelligence, Data Science, and Technical Sales.
  • Salaries: Despite the rise in candidate availability, starting salaries and contract pay rates continue to grow modestly.

Labour Market Statistics

According to the Office for National Statistics (ONS), UK job vacancies for September–November 2024 totaled 818,000, reflecting a decrease of 31,000 compared to the previous period. However, vacancies remain 2.8% above pre-pandemic levels, showing a sustained demand for skilled professionals.

Future Outlook

Neil Carberry, REC Chief Executive, summed up the report, stating:

“This report emphasises a weak mood in some businesses as they built their budgets for this year, and made changes designed to save on costs after a tough Budget. That said, sentiment can change quickly. December is always a hiring low point, and a new year brings new hope – with inflation under control, low unemployment and economic growth expected, the fundamentals are better than many appreciate. Recruitment is crucial now and could signal a broader economic recovery, potentially impacting the £44.4bn contribution to the UK economy in 2023.”

Martin Crapper, Managing Director of Redline Group commented:

"Despite economic uncertainty, demand in our sector remains strong. We’ve seen quarter-on-quarter growth in role registrations and interview activity, underscoring the critical hiring needs of our clients. Our projected revenues for the first quarter of 2025 are significantly ahead of the previous four quarters, indicating positive sentiment and investment in hiring for roles across R&D, Engineering, Sales, Marketing, and Manufacturing."

At Redline Group, we build world-class teams for technology companies, changing lives every day. With four decades of experience, we are trusted experts in recruiting for professional Contract, Permanent, and Executive roles within the Electronics and High-Technology sectors.

Whether you're looking to future-proof your hiring strategy or explore exciting career opportunities, we’re here to help.

For tailored recruitment advice or to learn more about this month’s labour market report, contact Graham Cross on GCross@RedlineGroup.com or call him at 01582 878849.

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