Report on Jobs: Starting appointment softened

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 December report.

Overview:

• Staff appointments decline, albeit at a softer rate than in November.
• Candidate availability continued to rise.
• Temporary/Contract vacancies continued to increase.
• Temp/Contract billings growth quickened.

Decline in Staff Appointments Softened:

The rate of permanent staff appointments declined for the fifteenth straight month in December. While softened from November, it was nevertheless solid overall and stood in marked contrast to the long-run survey trend of rising placements. The softer demand for permanent staff was attributed by recruitment agencies to fewer vacancies and hiring freezes due to lingering uncertainty around the economic outlook.

The rate of contract/temporary billings fell for the second month in December. The contraction was modest, having eased since November. There were several reports of employers reducing their usage of short-term staff, often due to cost considerations and lower activity levels. 

Speaking about this, Justine Andrew, Partner and Head of Education, Skills, and Productivity at KPMG UK, said: “While the data for December shows hiring activity for both permanent and temporary roles fell at a softer rate than the previous month, businesses are still making redundancies and pausing hiring due to a lacklustre economic outlook.”

The number of open roles has fallen continuously on a three-month rolling basis since June 2022, standing at 949,000, to hit the lowest level for nearly two-and-a-half years. Nevertheless, vacancies were 123,000 higher than that recorded just prior to the COVID-19 pandemic.

Only four of the ten monitored employment categories registered greater demand for permanent workers during December. Engineering, however, had the third highest increase in permanent staff demand and fourth highest rise in contractor demand. Skills shortages in permanent and contract/temporary staff were noted for the following specialist areas: Electrical, Mechanical, DevOps, RF, Software, IT, and Service Engineering, along with AI Developers and Cyber Specialists.

Budgetary Pressures Dampen Salary Inflation:

Although sharp and quicker than November's 32-month low, the rate of pay growth was the second-softest seen since March 2021. Recruiters often mentioned that competition for suitably skilled workers continued to push up pay. However, budgetary pressures have dampened salary inflation.

A further uptick was also noted in average hourly wages for contract/temp workers. The rate of pay growth, albeit slightly softer than the historical average, was the quickest seen since August. Panellists shared that the higher cost of living and shortages of suitably skilled workers had placed upward pressure on wages.

Justine Andrew, Partner and Head of Education, Skills, and Productivity at KPMG UK, had this to say: “For those lucky enough to start a new role there was another sharp increase in starting salaries due to competition for skilled workers. But the rise was not as high as those seen in recent months as businesses face ongoing pressure on their budgets. Recruiters tell us this pressure is now impacting temporary contracts, with fewer people employed on a short-term basis.”

Global the electronics and tech markets are starting to see an upward trend. According to IDC’s latest research (21st December 2023), with the global demand for artificial intelligence (AI) and high-performance computing (HPC) exploding, coupled with the stabilising demand for smartphones, personal computers, infrastructure, and resilient growth in automotive; the semiconductor industry is expected to usher in a new wave of growth. Semiconductor products cover logic integrated circuits (IC), analog IC, microprocessor and microcontroller IC, and memories. Overall semiconductor sales market should recover in 2024 with supply chains, including design, manufacturing, packaging, and testing, bidding farewell to the downturn in 2023.

Final Word:

Neil Carberry, REC Chief Executive, summed up the discussion by saying: “Recruiters went into 2024 with the hope that an upturn is coming, based on feedback from clients. Driving this economic growth would be a huge benefit for us all, leading to more successful firms, higher pay, and the ability to cut taxes and fund public services. But the growth must come first.”

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.