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Report on Jobs: Businesses remain cautious in hiring

The KPMG and REC, UK Report on Jobs uniquely provides the most comprehensive guide to the labour market, drawing on original survey data provided by recruitment consultancies, such as Redline Group, and employers to provide the first indication each month of labour market trends. Here are the main findings from the September report


  • Demand for staff rose.
  • Overall staff availability also rose. 
  • Starting salaries rose sharply. 

In August, the overall availability of candidates expanded for the sixth straight month. Competition for talent continued to push up starting salaries and contract/temp rates.

Vacancies and Placements:

The noted drop in placements was linked to client hesitancy and recruitment freezes amid a weaker macroeconomic climate. Recruiters mentioned that shortages of some types of candidates with certain skills/qualifications were also increasing competition and slowing down the hiring process. Speaking about this, Claire Warnes, Partner, Skills, and Productivity at KPMG UK, said: "For recruiters, the picture is still complex. Despite an increasing pool of candidates this month, the economic outlook is keeping businesses cautious. Many employers aren’t ready to commit to permanent roles, and those who indicate they cannot find candidates with the right skills."

The overall demand for staff increased only slightly during August. However, engineering remained among the monitored job categories that registered an increase, showing the second-strongest rise in demand for contract/temporary vacancies. Skills shortages in permanent and contract were noted for the following specialist areas: Design Engineering, ElectricalMechanicalRF, Design, Electronic, Hardware, Software, Cloud, and Service Engineers, along with AI Developers, Analysts, Web Designers, CAD, and Cyber Specialists.

Data from the Office for National Statistics (ONS) indicated that vacancies reduced over the three months to July 2023 to stand at 1,020,000. Yet, they remained comfortably above the level seen just prior to the COVID-19 pandemic (826,000 in the three months to February 2020).

Candidate Availability and Pay Pressure:

Recruitment consultancies across the UK noted sharp increases in candidate supply, for both permanent and contract/temp roles. The principal drivers of the latest upturn were redundancies and some slowdown in hiring.

Neil Carberry, REC Chief Executive, said: “August is always a slower month for new permanent roles, but this has been exacerbated in 2023 by the lack of confidence to start the new hiring we saw among firms in the Spring. As inflation begins to drop, it is likely that firms will return to the market later in the year – employer surveys suggest confidence may be returning. But for now, the labour market has more slack than it has since the height of the first lockdown. Firms continue to use temps to fill any short-run needs, with the small drop in August representing little change from the past few months.”

However, for workers who did start new roles in August, the Permanent Salaries Index signalled a further rise in average starting pay. The current period of temp/contract wage growth also stretched to over two years as billings saw a further increase. Recruiters reported that employers were offering higher pay for highly skilled and desirable contractors which were often in short supply while businesses hiring permanent staff pushed up salaries due to shortages of specifically skilled candidates, counteroffers, and the rising cost of living.

Latest data from the Office for National Statistics (ONS) signalled that annual growth of employee earnings (including bonuses) quickened to +8.2% over the second quarter of 2023, up from +6.1% over the first quarter of the year. Speaking on these conditions being favourable for candidates looking for new roles, Claire Warnes said: “The August summer break has seen little change in the ongoing tight labour market conditions. If you’re looking for a new role – the market remains in your favour, as starting pay continues to be driven up by inflationary pressures and a high demand for candidates with specific skills across many sectors.”

Future Outlook:

Major US tech companies are threatening to scale back their operations and hiring in the UK. While nothing is certain yet, this could impact technology job vacancies and hiring trends if it comes to pass due to the major presence of these companies within the UK. Acting as top hirers in the tech arena, a reduction in their operations could lead to a reduction in well-paying high-tech jobs.

On the other hand, there is hope and potential for new and different vacancies to open up. The tech industry is evolving rapidly, as in the case of the increased use of AI. Building relationships with homegrown UK tech companies across thriving sectors like fintech, cybersecurity, EdTech and clean energy is key. These high-growth tech sectors are likely to keep up robust hiring even amidst any ‘Big Tech’ disruptions.

Upskilling existing UK tech talent to transition into emerging roles will also become more valuable. With niche tech skills in AI, machine learning, automation and data analytics, candidates can fill vacancies even amidst a hiring slowdown.

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 passionate, 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 or call him at 01582 878804.


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