As we approach the middle of the year and the end of Q2, trends in activity from across the UK recruitment sector look steady, if not a little complex.
Panellist data from May indicates that the demand for, and placements of new hires remains weak. However, the rate of decline has slowed for the third consecutive month. These figures are the strongest we have witnessed in more than a year and the temp billings numbers have also improved.
The increases to the National Minimum Wage and the National Living Wage that came into force in April appear to have created a ripple effect on salary.
Once again starting salaries have increased to only a slightly lesser extent than April’s four-month high. Daily and hourly rates for temporary staff mirrored this. Daily and hourly rates rose at only a slightly slower pace than in the previous month.
Anecdotal evidence across each region indicates organisations are keen to hire, but remain hesitant. The upcoming election and the incoming government’s activities within the first 100 days will need to be assertive and decisive if businesses are to become more confident in their decision-making.
The recruitment landscape – May 2024.
Here is our deep dive into May’s recruitment landscape.
Vacancies.
Across the last 3 months to April, the ONS reported an overall drop in the number of UK vacancies. In total, the UK recorded 898,000 vacancies, a reduction of c26,000 vacancies in the 3 months to April 2024.
Year on year this equates to 190k fewer open roles, but remains higher than the pre-pandemic numbers. In March 2020, there were 796k recorded vacancies in the UK.
Our recruiter colleagues echo these findings. They reported that vacancies have fallen for the 7th consecutive month. However, the rate of contraction was slight and the slowest we have seen in those 7 months.
Permanent and temporary.
Across the permanent market, vacancies dropped, and May’s figures took the current downturn to 9 months. Again, the rate of contraction was marginal and was the weakest recorded since October 2023.
In the temporary and contract markets, worker demand was unchanged in May following a 3-month period of declining temporary vacancies.
Public vs. private sector.
Within the private sector, there were concurrent increases in vacancies for permanent and temporary staff during May. The rate of growth for permanent workers was solid and the strongest recorded in the last 12 months.
Looking closely into the public sector, there was a drop in demand for both permanent and contract workers. The steepest rate of contraction was seen in the requirement for permanent staff. For temporary staff, the rate of reduction was small and the weakest in the latest 3-month sequence of declining vacancies.
Vacancies by sector.
Only 3 sectors within the permanent market and 5 within the contract market recorded a growth in vacancies. These were led by Engineering, Blue Collar and Financial and Accounting.
IT and Computing recorded a decline in the demand for both permanent and contract roles.
Demand for skills.
The demand for IT and Computing skills within the permanent and contract markets was similar. These were
- Analysts
- Data professionals
- Developers (in particular Java)
- Software architects
- Software Engineers
- IT support.
Here at Ignite, we have continued to take requirements for professionals that provide a link between operations and tech. These include Business Analysts – especially those with a technical focus. On top of this, we can add Cloud DevOps roles to this list across both Azure and AWS environments.
Hiring.
Permanent placements.
As we mentioned in the opening statements, permanent placements dropped again in May. This extends the downward trend that began in October 2022. However, the rate was modest and the softest we have seen in a year.
Respondents highlighted that this ongoing drop was due to fewer openings amid a lack of available roles. Client hesitancy meant there were also significant delays in hiring decisions while some reported that existing roles had been repurposed to avoid hiring new recruits.
This trend appeared to be most steep in the south of England while the Midlands bucked the trend and reported marginal growth.
Temporary billings.
Once again, temporary and contract billings fell in May but at a slower pace. Again, it was reported that this was due to a reduction in demand and candidate shortages for specific roles.
London and the south of England recorded a drop, while respondents from the Midlands and the North reported solid growth.
Candidate availability.
Permanent.
The availability of permanent candidates continued to rise again in May. This continues the current period of expansion to 15 months and was the highest we have seen since the end of 2020.
It is thought that a mass of redundancies, reduced demand for staff and fewer vacancies have all contributed to the abundance of people looking for work.
Both the North and the South regions witnessed the highest rates of candidate availability, while the capital saw the slowest increase. Despite this though, the rate of growth was still steep.
Temporary.
In line with the current trend, the number of contract or temporary workers increased again across May. This takes the current period of growth to 15 months.
Once again, it is believed that redundancies, lay-offs and a general drop in demand have driven the expansion of those looking for temporary or contract roles.
The South of England saw the steepest growth rate while the Midlands reported only a moderate rise.
Pay and salary.
Respondents highlighted that starting salaries for permanent joiners increased again in May; the 39th consecutive month.
Inflationary pressures, continued cost of living increases and a response to the living wage increases in April were thought to be significant contributory factors.
The steepest increases in permanent salaries were seen by recruiters in the North, while the slowest increases were recorded by those in the South.
Hourly and daily rates for temp and contract workers were also inflated in May. This continued the ongoing trend we have seen since March ’21. Echoing the regional variations within the permanent market, the rate increases were steepest in the North and softest in the South.
The ONS continues to report growth in the economy, with earnings going up +5.7% on average year on year.
In the public sector, earnings rose by +6.2% while in the private sector, there was an increase of +5.9%.
The rest of 2024.
Economic experts and commentators from inside the world of recruitment agree that the UK jobs market is robust.
Experts predict that the month’s data coupled with expected interest rate cuts, easing inflation and increased consumer confidence over the summer, will hopefully deliver a better economic outlook for the second half of 2024.
Although candidate numbers have rarely been higher, skilled candidates remain hard to secure. Respondents have noted that candidate uncertainty is being fuelled by cost of living rises and inflationary pressures. Counter offers have risen as businesses use salary and benefits adjustments to keep skilled workers and deter them from accepting job offers elsewhere despite high starting salaries.
The upcoming election in July will affect the hiring behaviours of UK organisations and candidate decision-making.
The incoming government has to use the opportunity to address the skills shortfall by working with organisations. Addressing the Apprenticeship Levy and offering funding to support high-quality, modular training are just a couple of ways the government can support businesses to address the skills shortages within their organisations.