November 2024 UK Labour Market Report: Engineering sector continues to grow

Stay informed about the latest developments in the UK labour market with the KPMG and REC's UK Report on Jobs, featuring in-depth insights from recruitment consultancies like Redline Group. This comprehensive monthly report highlights the key dynamics shaping the UK workforce. Below are the critical findings from October 2024 survey data.

Key Highlights from October 2024 Report:

• Vacancies: Permanent and temp/contract vacancies continue to decline, with engineering as the notable exception.
• Staff Availability: A further rise in candidate availability.
• Pay Rates: Modest increases in contract/temp pay rates, recovering slightly after little change in September.

October Job Market Analysis

The October report highlights an evolving job market adjusting to the impacts of the latest Budget. While rising taxes and higher business costs have led some companies to pause hiring, the engineering sector shows signs of resilience. Jon Holt, Group Chief Executive and UK Senior Partner KPMG, noted: “With many of the tax rises announced in last week’s Budget impacting businesses, the expectation from some chief execs is that this could further dampen hiring as companies grapple with absorbing any extra costs. However, with the Office for Budget Responsibility forecasting a rise in productivity and a Budget that signalled more long-term policy making, businesses may feel that this all brings some degree of certainty.”

October’s survey data revealed a notable decrease in permanent placements, with companies reporting recruitment freezes due to lower business confidence. Many firms attributed this to uncertainty created by the late October government Budget which introduced ambiguity around future economic stability. In the contract and temporary employment sector, demand for candidates has also softened, with some companies struggling to replace expiring business contracts. Meanwhile, an increase in overall candidate availability persists, driven by redundancies and reduced hiring demand.

Industry-Specific Insights

• Permanent Placements: Recruitment freezes, and cautious business sentiment contribute to a significant reduction in permanent hiring across various sectors.
• Sector-Specific Trends: The downturn in permanent roles was observed across most industries, except engineering. Skills shortages remain critical in fields such as Aerospace, Electrical and Electronics Engineering, Software Development, AI, Cybersecurity, and IT Support.
• Salaries: Starting salaries for permanent positions continue to rise, albeit at a slower pace. Compensation for contract and temporary roles saw modest growth, with highly skilled candidates in specialised fields still commanding premium pay offers

This analysis underscores a cautious hiring environment amid economic uncertainty, with demand shifting toward highly skilled temporary roles in key industries.

Market Statistics: UK Job Vacancies and Pay Trends

According to the latest data from the Office for National Statistics (ONS), UK job vacancies totalled 841,000 from July to September 2024. This represents a decrease of 34,000 vacancies (3.8%) from the previous quarter (April to June), yet the job market remains robust with vacancy levels still 5.7% higher than pre-pandemic benchmarks.

Pay Rises and Inflation Trends

Employee earnings continued to grow on an annual basis, reflecting sustained wage increases. Meanwhile, inflation has continued its recent downward trajectory. This cooling inflation rate could help ease the cost-of-living pressures on employees, even as wage growth remains positive.

These insights highlight the resilience of the UK job market amidst changing economic conditions, as vacancy rates stay elevated while inflation gradually decreases.

Future Outlook:

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

“These figures are a timely reminder that demand from employers for new staff has weakened since the election – though the overall picture remains resilient by comparison to pre-pandemic. There are a few positive signs in this month’s data – like more robust performance in London, which is often a bellwether. Firms will be looking for the Government to deliver a clear, stable growth plan and detailed regulatory changes that enable firms rather than put them off over the next few months. Temporary/contract work in particular is a fantastic way of helping people take steps out of inactivity, and the threat of new employment laws undermining opportunities for workers must be addressed.”

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 futureproofing 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.