March 2024 Labour Market Report: Inflation Reaches Target Ahead of Schedule, Emphasising Shift Toward Growth

Explore the most recent developments in the UK labour market through the KPMG and REC UK Report on Jobs, featuring exclusive insights from leading recruitment consultancies including Redline Group. This detailed report leverages original survey data to offer a monthly overview of labour market dynamics. Here are the key highlights from February's findings.

Key Findings from the February Report:

• Market for green jobs set to grow substantially in coming years.
• Salary inflation at slowest recoded rate in three years.
• Labour supply expanded at historically sharp pace.
• Temporary/Contract jobs fell for the first time in 3.5 years.

Talent placements and Demand:

Around 40% of recruiters noted lower permanent staff appointments in the latest survey period, while 26% saw an increase. The Total Vacancies Index, adjusted seasonally, fell from 49.4 at the start of 2024 to 46.9 in February, to signal a drop in overall demand for workers for the fourth straight month. An accelerated decline was, however, noted in billings from the employment of short-term staff, often attributed to tighter budgets. This also showed a marginal decline in temporary/contract opportunities for the first time since August 2020. Speaking about this, Jon Holt, Chief Executive and Senior Partner of KPMG in the UK, said: “The impasse between economic uncertainty and hiring decisions continued into February. Chief Executives tell me they are ready to invest and grow - including taking on new staff - yet the reality is they’re being held back by the prospect of weak demand.”

Employment Categories and Skills in Demand:

The total number of job opportunities decreased by 26,000 from the three months leading to October 2023, reaching 932,000. This decline marks the 19th consecutive quarter of decreasing opportunities. Despite this overall trend, the engineering sector remains resilient and continues to thrive.

In February, there was a decrease in demand for permanent workers across eight out of ten major employment categories. However, the engineering sector experienced a notable increase in demand for permanent staff, alongside the second highest rise in demand for contractors.

Shortages in skills were observed for both permanent and contract/temporary staff in various specialist areas. These include Electrical, Mechanical, Design Engineering, RF, Software Development, IT Systems Administration, Service Engineering, as well as roles in AI Development and Cyber Security.

Focus on Growth:

Data from the Office for National Statistics showed that total employee earnings (including bonuses) rose by +5.8% in the final quarter of 2023 compared to the same period one year ago. However, due to reports of stabilising salaries, tighter client budgets and improved candidate numbers, the rate of salary inflation edged down to the lowest recorded since the current period of rising pay began in March 2021. Neil Carberry, REC Chief Executive, summed up the discussion by saying: “As inflation is falling back to target earlier than expected, it’s time to get the focus on growth. Given recent news about GDP dropping, this overall picture is no surprise – but it is certainly still quite resilient by comparison with previous recessions.”

Future Outlook:

The transition to a greener future may be difficult but it is vital to define and understand green jobs. After all, the global market for people to make the green economy work is on the precipice of significant expansion. However, achieving a useful understanding of the green jobs market is proving to be a challenge unto itself, exacerbated by a lack of unity in agreeing what a green job is.  The green job market in the UK is poised to grow in the coming years. The UK’s Climate Change Committee (CCC) suggests that the transition to net zero could deliver between 135,000 and 725,000 net new jobs.

While we strive towards the rapidly flourishing green jobs market, Neil Carberry sums up the current economic climate by saying,

“The temporary labour market is the unsung hero of the economic uncertainty of recent years. It keeps the cogs of the economy turning amidst uncertainty and labour shortages – but it still needs nurturing. As we approach the General Election, businesses will be looking to politicians for commitment on this, and reforms of regulation that will support it from IR35, to regulating of the umbrella market and delivering flexibility to the Apprenticeship Levy.”

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.