Steep decline in recruitment as economic woes worsen

Recruitment activity across the UK weakened at the start of the final quarter, according to the KPMG and REC, UK Report on Jobs survey, with recruiters signalling a renewed drop in permanent placements and stagnant temp billings as heightened uncertainty over the economic outlook weighed on staff hiring. Additionally, there was a further slowdown in rates of vacancy growth for both permanent and temporary staff.

Staff had a greater hesitancy to look for or switch roles alongside a generally low level of unemployment that led to a further steep drop in the supply of workers.

The sustained decline in candidate numbers and cost-of-living pressures continued to place upward pressure on starting pay. However, rates of salary inflation and temp pay growth fell to 18 and 17-month lows, respectively.  

The report found that the number of permanent placements fell for the first time in 20 months and survey respondents often mentioned that heightened economic uncertainty had led some clients to reassess their recruitment plans, while candidate shortages also dampened hiring.

Although demand for staff continued to increase in October, the rate of vacancy growth softened for the sixth month running.

The total supply of candidates fell sharply once again during October. The decline in permanent staff availability remained more acute than that seen for temporary labour.

Permanent staff appointments fell across all four monitored English regions in October, with London seeing the steepest rate of reduction.

Slower increases in staff demand were registered across both the private and public sector at the start of the fourth quarter, with only growth of permanent positions in the public sector ticking higher. The weakest upturn in vacancies was signalled for temporary roles in the public sector, while the quickest was seen for permanent positions in the private sector.

Claire Warnes, partner, skills and productivity, at KPMG UK, said the looming recession is clearly impacting the UK jobs market.

“Employers’ caution in hiring combined with fewer available candidates has resulted in the number of permanent placements falling for the first time in nearly two years,” she said.

“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.”