The UK’s job market has seen a notable decline in permanent staff placements, according to new data from KPMG.
The KPMG and REC, UK Report on Jobs survey data shows a substantial drop in placements – the biggest decrease since March.
The trend is attributed to recruitment freezes and increased economic uncertainty.
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Temporary Employment Market Shows Signs of Stabilization
In contrast, the temporary employment sector is experiencing a slower rate of decline. This suggests while the market remains under pressure, the demand for temporary staff is stabilizing.
Vacancy Rates Continue to Fall
The number of job vacancies has decreased for the 13th consecutive month, with the sharpest decline observed since August 2020. This downward trend reflects the ongoing challenges in the market.
Regional Variations in Employment Trends
All monitored English regions have reported declines in permanent placements. The South of England experienced the most significant drop.
Factors Influencing the Job Market
Several elements are impacting the current employment landscape:
- Economic Uncertainty: Ongoing concerns about the economic outlook are causing employers to exercise caution in their hiring practices.
- Policy Changes: Recent government policies, including tax increases and proposed employment regulations, are influencing employer confidence and hiring decisions.
- Sector-Specific Dynamics: Industries such as retail, IT, and professional services are experiencing varying levels of demand, affecting overall employment trends.
Outlook for Job Seekers and Employers
The report says the current environment presents challenges for both Job Seekers and employers.
Job seekers may face increased competition and fewer opportunities, particularly for permanent positions.
Employers, on the other hand, are navigating economic pressures and policy changes that affect their workforce strategies.
What the Experts Say
Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said:
“Businesses are having to weigh up the prospect of increasing employee costs following the Budget, which has led to an accelerated slowdown in hiring activity across the board. While the data was already heading in that direction, permanent placements saw their steepest reductions in over a year last month, and temporary roles also saw a fifth consecutive decline.
“This slowdown, alongside a growing availability of candidates in the market could put more downward pressure on wage inflation, which remained largely unchanged on last month’s 44-month low. This trend will be encouraging for the Bank’s monetary policy committee ahead of the next meeting later this month, although it may not be enough to counter wider inflationary pressures we are seeing in the economy.
“However, the prospect of further rate cuts through 2025, alongside the Government’s investment plans, both point to improved growth in the near term. This should give businesses greater confidence which may help stabilise the labour market.”
Neil Carberry, REC Chief Executive, said:
“It should be a surprise to no-one that firms took the time to re-assess their hiring needs in November after a tough Budget for employers. The drop in vacancies was led by private sector permanent roles, and slower permanent recruitment billings across the month also reflected this trend. The real question now is whether businesses will return to the market as they go into next year with greater certainty about the path ahead.
“The resilience of temporary recruitment offers some hope – private sector temporary hiring activity was almost flat across the country, by comparison with the drop in permanent hiring, and there was growth in some regions.
“Firms are likely to rest more on temps while they manage the current uncertainty, and that only serves to emphasise again the value of flexible forms of work to companies and people who need to find work quickly after redundancy.
“For policymakers, ensuring new regulations support rather than weaken our flexible jobs market is vital – especially after the Budget. Ensuring rules introduced by the Employment Rights Bill are tailored to protect agency and temporary work really matters for people.”
Alex Paterson, CEO of WhatJobs
“The current trends in the UK job market reflect the challenging economic climate businesses and job seekers face today. The sharp decline in permanent placements highlights a cautious approach from employers amid uncertainty, while the stabilization in temporary employment shows adaptability within the workforce.
At WhatJobs, we are committed to helping job seekers and businesses navigate these shifts. By offering access to diverse job opportunities and insights into market trends, we aim to empower both employers and candidates to make informed decisions in this evolving landscape.”
Navigating the Evolving Job Market Landscape
As the job market continues to evolve, staying informed about these trends is crucial for making strategic employment decisions. Both job seekers and employers should remain adaptable to navigate the changing landscape effectively.
