Further uplift in pay rates
Amid reports of a competitive market landscape, alongside evidence of a ripple impact on base pay rates following April’s increases in the national minimum and living wages, typical starting pay for candidates rose again during May. For permanent workers, salaries were reported to have increased markedly and to only a slightly lesser extent than April’s four-month high. Temp staff saw a similar trend, with pay rising at only a slightly slower pace than in the previous month.
Staff vacancies down only slightly
Although demand for staff continued to fall in May, extending the current downturn to seven months, it did so only marginally and to the lowest degree in this sequence. Moreover, the latest fall was exclusively led by permanent workers as temp staff demand was unchanged in the latest survey period.
Staff availability rises to greatest degree since end of 2020
May’s survey revealed another steep increase in staff availability. The rate of growth was the steepest recorded by the survey since December 2020. The faster expansion in the number of people looking for work was seen for permanent job roles. Panellists noted that a mixture of redundancies, higher unemployment and reduced demand for staff led to the broad rise in candidate availability.
Regional and Sector Variations
There was a steep reduction in the number of permanent placements in the South of England. However, a return to marginal growth was seen in the Midlands.
Two English regions recorded a drop in temp billings (London and the South of England). In contrast, solid growth was seen in the Midlands and the North of England.
Of the ten broad sectors covered by the survey, just three recorded growth. The strongest increase was seen for Engineering, followed by Blue Collar. The steepest drops in demand for permanent workers were seen for Retail and Secretarial/Clerical.
Temporary staff demand rose for half of the ten broad sectors in May. The strongest growth was for Engineering followed by Blue Collar. Where vacancies fell, the most prominent decline was again seen for Retail.
Comments
Commenting on the latest survey results, Jon Holt, Chief Executive and Senior Partner of KPMG in the UK, said:
“We know our labour market is resilient. The big picture is that unemployment is historically low with the ease of filling vacancies back to pre-pandemic levels. Taken together with today’s data and expected interest rate cuts, inflation easing and increased consumer confidence over the summer, we will hopefully move towards a better economic outlook for the second half of 2024.
“But May’s data underscores the complexities in the current labour market. While demand overall remains weak due to firms still stalling on hiring decisions, the pace of decline has slowed for the third month in a row. Some sectors even saw demand growth – although a lack of skilled applicants could put further upward pressure on pay as employers compete to attract the best talent.
“Business confidence is ready to bounce back. And as well as counting on a more dovish Bank of England, ahead of the General Election CEOs will be closely following all parties’ policy commitments as they consider their plans for future growth.”
Neil Carberry, REC Chief Executive, said:
“The jobs market looks like it’s on its way back, with clear improvements over last month on most key measures, especially in the North and Midlands. While permanent hiring remains weak, these are the best numbers we have seen in more than a year, and the temp billings number has also improved.
“There is potential energy stored in the economy, as employers are feeling more confident. Political certainty and falling interest rates should add to lower inflation and help this turn into movement over the course of the rest of the year. REC members report that clients are ready to hire, but hesitant. These numbers suggest that caution may be starting to abate.
“Pay growth remains steady, reflecting both settlements made by employers for their staff, but also the substantial National Minimum Wage rise in April.
“No attempt to drive growth will succeed without the next government addressing people issues within its first 100 days. This must include reform of the Apprenticeship Levy to cover high-quality, modular training, and a long-term cross-departmental strategy to tackle labour and skills shortages, owned by the Cabinet Office but delivered locally. As the specialists in jobs, recruiters are ready to help, whoever wins on July 4.”
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