Following a long and difficult winter within UK recruitment, there are early hints of a turn in the labour market as we head into the spring.
Led by the private sector, these green shoots of promise showed slower rates of contraction across placements and vacant positions than in recent months.
Recruiters often herald activity in January and February as markers of what’s to come. So perhaps we have more positive prospects to look forward to as we move into 2025.
However, as April draws nearer, it brings with it rising employment costs. Both National Insurance contributions and the National Living wage are set to increase at the start of the new financial year.
Although welcomed by many, it does create another barrier of hesitation for employers and their hiring plans.
Here is our look into the recruitment landscape and the hiring activity across February.
The Recruitment Landscape – February 2025.
Vacancies.
Overall, vacancy data from February showed a decline across the UK for the 16th successive month. This was true across both permanent and contract markets.
Permanent vacancies fell for the 18th consecutive month and at a sharper rate than temporary ones. Contract roles showed a softer rate of decline and fell for the 7th successive month.
The public sector displayed the most marked decline. Temporary vacancies fell most prominently, falling at the fastest pace since June 2020.
Within the private sector, although both markets suffered, the fall was softer but still solid.
ONS data.
ONS data confirmed this pattern. In the 3 months to January 2025, there were 819,000 registered vacancies across the UK. This is 110,000 less than the same period in 2024.
Not only this, but total numbers of vacancies have also settled at a level that is 37% below the post-pandemic peak. In the 3 months to May 2022, the total number of UK vacancies was c1.3 million.
Vacancies by sector.
Within the permanent market, there was a broad decline for staff across all the monitored sectors.
Vacancies among the Clerical, Executive and Professional, and Retail domains were the hardest hit.
IT and Computing found itself out of the bottom three positions for the first time in many months. Our sector of interest found itself mid-table, and although it still reported a decline in vacancies, it was not as badly hit as in previous months.
Within the temporary market, the quickest drop in demand was experienced within the Executive and Professional sector. Retail and IT and Computing held 9th and 8th position respectively.
Demand for skills.
The following skills were most in demand within the IT and Computing sector,
- Analysts
- Automation Testers
- Cybersecurity
- Data positions – including Architects, Engineers and Scientists
- Developers – especially full stack and front end
- IT Directors
- Software Engineers – Especially Python
Placements.
Permanent placements.
The number of permanent placements made across the UK decreased again in February. This latest drop took the current streak of contraction to nearly 2 and a half years. However, there is hope… The rate of decline was the slowest reported in 4 months.
Recruiters taking part in this report cited that employers still have some doubts and are showing a lack of confidence in the economic outlook. Anticipating greater payroll costs also led firms to pause hiring in the latest reporting period.
Although this trend was experienced across the country, recruiters in the North of England reported the steepest drop.
Temporary billings.
Recruiters reported a sustained decline in temporary billings. Although the rate of contraction eased from the end of last year, it was still the second steepest recorded decline since June 2020.
Temporary billings have fallen in each of the last 8 months thanks to a weaker demand for staff, tighter client budgets and the non-renewal of contracts,
London reported the sharpest drop, while the softest drop was felt in the Midlands.
Staff Availability.
February saw another rise in the number of available candidates. This extended the rise of staff availability to 2 years – the longest period of growth since mid-2010.
During this period, staff availability has increased every month in the permanent market. The latest period of expansion has been quicker than the average over this period.
Recruiters continue to cite an increase in redundancy amid a shortage of vacancies as the cause.
This was true over all 4 monitored regions of the country, but the Midlands reported the sharpest increase in the number of available staff.
At the start of Q1, the availability of short-term staff increased at a quicker-than-average pace. This rate of growth hit a 4-month high and was the sharpest we’ve seen over the current 2-year sequence of expansion.
This was felt most significantly in London, while the south of England experienced the softest rise.
Pay and salary.
Although starting salaries are still growing, February saw a softer rise in starting salaries for permanent staff. The latest increase was the slowest we’ve seen over the current 4-year period of growth.
Where starting salaries were higher, this was linked to increased market rate efforts to attract skilled candidates.
London and the Midlands both recorded higher permanent pay rates. Rates were unchanged in the South, while the North recorded a drop in starting salaries.
Temporary hourly rates increased again for the 5th consecutive month in February. Although the rate of wage inflation quickened, it was marginal overall and slower than the series average.
In some cases, it was reported that rates were increased to attract suitable candidates. On average though, these rates had stabilised thanks to an increased number of job seekers overall.
Are you interested in recruitment trends? Head to our recent blog post on AI in Recruitment.
