Report on Jobs: Businesses Continue Hiring Despite Economic Instability in October
The latest KPMG and REC, UK Report on Jobs for October, is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies, including Redline Group, to provide the first indication each month of labour market trends. The critical information we help provide allows clients to make informed decisions over their recruitment strategies. Here’s the report and analysis for October.
Overview:
The number of permanent placements fell for the first time in 20 months, which indicated a slowdown in hiring activity. However, at 1,246,000, the number of open roles was +10.4% higher than that seen over the same period a year ago, despite slight fall in overall vacancies across the UK. The total supply of candidates continued to fall during October, albeit the rate of reduction eased fractionally. Starting pay for new permanent joiners increased at the slowest rate for a year-and-a-half. However, contract / temp wage inflation slipped to its lowest since May 2021.
The seasonally adjusted Total Vacancies Index dropped to 56.7 in October from 58.1 in September and signalled a further slowdown in growth of demand for staff with the weakest upturn in vacancies signalled for temporary / contract roles in the public sector, while the quickest was seen for permanent positions in the private sector. Speaking about this, Claire Warnes, Head of Education, Skills, and Productivity at KPMG UK had this to say: “Now more than ever, it’s essential that we focus on upskilling the workforce to support and boost economic recovery when it comes. The jobs market will bounce back, particularly if we invest in the skills of the workforce across all sectors of the economy.”
Drop In Staff and the Reasons Behind it:
Recruiters explained the drop in candidate numbers by sharing that people had become more reluctant to switch or seek out new roles due to concerns around the weaker economic outlook, fewer foreign workers, and a low unemployment rate. The reported decline in permanent staff availability remained more acute than that seen for contract/temporary labour. Neil Carberry, Chief Executive of the REC, said: “The economic and political uncertainty of September and October has caused employers to become more cautious in their approach to hiring than during the frenzy of earlier in the year. Decision-making timelines for permanent hires have extended, for instance. But vacancies and pay are still rising, temporary worker demand is high, and permanent hiring has fallen for the first time in almost two years. Activity, overall, is still well in advance of pre-pandemic levels.”
Vacancies Growth Continues to Moderate:
The drop in candidate numbers was reflected by a slowdown in growth of demand for staff. Data from the Office for National Statistics (ONS) showed that the number of open positions had declined by 46,000 compared to the second quarter. Yet permanent staff vacancies continued to rise across all ten monitored job categories in October, with Engineering being the sector with third-highest rate of growth. The rate of growth also signalled skills shortages in Electrical, Electronic Hardware, Mechanical, Radio frequency, and Engineering roles, along with permanent skills shortages in Analyst, Data Engineering, Data Professional, Developer, Digital Infrastructure, and IT Software roles. Contract / temp skills shortages on the other hand revealed higher demand for Automation Testers, Data Professionals, Developers, IT and Software professionals.
What Does the Future Hold?
Based on the REC’s latest Jobs Outlook, business confidence in the UK economy fell by a further 3% from the previous rolling quarter. Employers’ confidence in making hiring and investment decisions also fell slightly, due to rising interest rates and a bleak economic outlook with record high inflation. However, the immediate outlook for hiring remains positive, with employers more optimistic and intending to grow their workforces if they can find suitable candidates. Neil Carberry had this to say about the situation: “It remains the case that firms in many sectors are struggling to hire, as hours worked remain below their pre-pandemic level despite record-low unemployment. We’re looking to the Autumn Statement later this month to help with removing the brakes on growth by reforming the apprenticeship levy to build a more effective skills system, improving support to help people move from inactivity to work, and align other policy areas – like work permits – with a growth strategy."
The UK is currently facing a unique challenge in the form of a low unemployment rate, along with growing economic inactivity. The unemployment rate for June to August 2022 has decreased by 0.3% on the quarter to 3.5%, the lowest rate since December to February 1974. On the other hand, the economic inactivity rate increased by 0.6% to 21.7% in June to August 2022. Based on this data presented by the ONS, it’s quite clear that vacancy levels remain high, but employers are having a hard time filling these vacancies.
The UK labour force is contracting and is not meeting the demands of the economy. Growth in public sector vacancies reflects that more people are leaving public sector jobs for better paid work in the private sector. Businesses are also still hiring, which signals that the jobs market remains robust amid economic uncertainty. In a market where firms need to hire despite being under pressure, recruitment professionals, such as Redline Group, are more important than ever as they provide an essential matching service. The government should tap into the knowledge of labour market experts to improve productivity, tackle regional disparities, and support those who are currently economically inactive, back into work.
Redline Group continue to be one of the UK’s most trusted Electronics and High Technology recruitment specialist for professional Contract, Permanent and Executive positions. With four decades of experience in knowledge-led recruitment, 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, call David Collins on 01582 878804 or email him on DCollins@RedlineGroup.com.