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Report on Jobs: Caution around permanent hiring persists amid economic uncertainty

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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 November report.


  • Candidate availability expands at a sharper pace.
  • Demand for staff stabilises through October.
  • Starting salary inflation slips to a 31-month low.

October data pointed to a softer but continued fall in permanent staff appointments. On the other hand, temporary/contract activity rose for the second straight month.

Vacancies and Placements:

The Permanent Placements Index showed a reduction in the number of people placed into permanent job roles across the UK for the thirteenth successive month. Recruiters frequently linked this latest drop in permanent staff hiring to caution around the economic outlook, with some recruitment freezes, delays to hiring decisions and a minor reduction in vacancies. Survey data also signalled back-to-back increases in contract/temporary billings. The firmer demand for short-term staff due to its greater flexibility supported the latest upturn in billings. However, others indicated that budgetary pressures and fewer than anticipated projects at clients had dampened overall growth.

ONS (Office for National Statistics) data showed that total vacancies remained on a downward trend over the third quarter of 2023. At 988,000, the number of open roles was 43,000 below that recorded over the second quarter of 2023 and the lowest since the three months to July 2021. However, the number of overall job opportunities remained nearly 20% above that seen prior to the pandemic.

Speaking about this, Claire Warnes, Partner, Skills, and Productivity at KPMG, said: “The jobs market is facing a cyclical challenge – there are people out there who want to work, and there’s a decent availability of candidates, but they often do not have the right skills for the roles on offer. This means higher starting salaries are still being offered as businesses compete in the ongoing battle for talent. While the rate of decline in permanent placements is the weakest since June – this follows more than a year of cautious hiring due to economic uncertainty and means many businesses are unable to commit to long-term strategies and instead are having to focus on the here and now, by employing temps. The sharper rise in available candidates is good news for recruiters, but this comes at the expense of employers who are making more redundancies as they tighten budgets due to ongoing high inflation.”

Engineering was among the monitored job categories that registered the third-highest increase in permanent staff demand in September and the fifth-highest demand in temporary/contract staff demand. Skills shortages in permanent and contract/temp staff were noted for the following specialist areas: Engineering Management, Engineering Directors, Electrical Engineers, Mechanical Engineers, Software Engineers, Cloud and Data Engineers, along with Software Developers, and Cyber Security Specialists.

Pay Growth Reaches Normalised Parameters:

Average starting pay for permanent staff continued to increase at the start of the final quarter of 2023. The main reasons behind the rise were still competition for suitably skilled staff and the higher cost of living had placed further upward pressure on pay. A sustained rise in average hourly pay rates for short-term staff was also noted. However, the rate of wage growth was only slightly stronger than September's 31-month low and weaker than the series average. According to anecdotal evidence, contract/temp pay had been increased by employers to attract and secure suitable candidates. However, greater pressure on client budgets weighed on overall growth.

Neil Carberry, REC Chief Executive, said: “In many ways, the labour market is marking time waiting for the brakes to be taken off growth by the Bank of England. While permanent hiring is now declining more softly, temporary hiring continues to pick up the slack – with billings gently growing for most of this year on the back of rising wages. While the rate of pay growth has now returned to more normal parameters, it is still strong, especially in sectors where staff remain in short supply. That sectoral split is ever more pronounced, with challenging sectors like construction and IT sitting in a very different place to hospitality and healthcare, which continue to be affected by shortages.”

Make UK, the Manufacturers organisation recently reported that UK businesses are set to see a surge in the use of Artificial Intelligence (AI) and Machine Learning as they push for greater automation and improvements in productivity, efficiency and quality – but many are still facing significant barriers - according to a new report the published 30th October.

However, manufacturers are citing a number of barriers which threaten to scupper their efforts to adopt automation, with almost half (46%) pointing to a lack of technical skills as one issue

Redline Says:

Martin Crapper, Redline’s Managing Director, had this to say about this month’s report: “The electronics and high-technology market is somewhat at odds with the wider general hiring climate. Demand for electronics, mechanical and software R&D Engineers remains strong, both across Contract and Permanent hires as companies look to 2024’s investment and project plans and seek staffing solutions to help them achieve their goals. There has also been a marked upturn in Technical Sales & Marketing vacancies. The technology sector is approx. 13% of the £40Bn UK recruitment sector, and whilst we have seen some high-profile restructuring and job losses, they have tended to be at larger, global technology companies. The Small-Mid sized technology companies across the UK seem generally to be better matched to the current economic pressures.”

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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