The headlines from the latest REC report into recruitment activity make bleak reading.
Recruiters across England have reported a further decline in permanent placements in October. This trend was also reflected in the temporary market with October seeing the steepest reduction in temporary billings for 7 months.
Vacancies have also fallen at an accelerated rate and continue the current period of decline. Once again, this was true across both permanent and temporary markets.
Official data from the ONS backs up the recruiter experience. The ONS report that the 3 months to September was the 27th successive quarter in which the number of vacancies declined. Overall, the total number of vacancies was down by 34,000 compared to the 3 months to June.
The total number of vacancies has hit 841,000; the lowest we have seen since May 2021.
Here are more findings from the data.
The Recruitment landscape – October 2024.
Vacancies.
Permanent and Temporary.
October 2024 marked 1 year of permanent and temporary vacancy contraction. Across the entire market, the rate of contraction was the steepest we’ve seen since Jan 2021.
The latest data on the permanent market reveal that October was the 14th month in which a reduction was recorded. Similarly, within the temp sector, October was the third consecutive month of decline, and the contraction was the sharpest we’ve seen in over four years.
Public vs. Private Sector.
Within the private sector, October’s data recorded modest declines in the demand for both perm and temp workers. Public sector demand echoed this and also showed falls across both markets.
Vacancies by sector.
In the permanent market, vacancy levels dropped across nearly all areas of industry. ‘Blue Collar’ and ‘Engineering’ were the only 2 sectors that recorded a marginal growth in worker demand.
The steepest declines were seen in both ‘Retail’ and ‘IT & Computing’.
Once again, only ‘Blue-Collar’ temporary vacancies recorded a fractional growth in demand. ‘Executive & Professional’ and ‘IT & Computing’ sectors showed the steepest contraction in demand for contract hires.
Skills in demand.
Where there were requirements for skilled IT and Computing staff, recruiters highlighted the desire for the following skills.
- AI Developers
- Cyber Security
- Data professionals – including engineers, architects and scientists
- Developers – particularly Full Stack and Java
- Software Architects.
Placements and billings.
Permanent placements.
As mentioned, October extended a harsh run of permanent placement contraction across England to 25 months.
This decline was broad, with the South of England showing the largest rate of decline. Optimistically, London saw the smallest contraction. Typically, London is a bellwether of activity, so perhaps this is a green shoot of optimism over what is to come.
When asked, recruiters reported that clients had talked of recruitment freezes amid low business confidence.
Temporary billings.
Within the temporary sector, October’s recruiter evidence highlighted a 4th consecutive month of decline. The rate of contraction was also strong and the steepest since March.
Temporary billings fell most steeply in London and the South of England. In contrast, recruiters in the Midlands reported a solid growth in temporary billings.
Here, recruiters reported a lack of demand for contract workers. Our conversations with contractors and clients have revealed a very tough and uncertain contract market. Many of the contractors we have spoken to have expressed a desire to look to permanent work and the levels of security that come with it.
Candidate availability.
October was the 20th month which recorded a growth in candidate availability.
It was thought that this accelerated expansion within the permanent market was driven by redundancies and the lack of demand.
This trend was echoed across each of the recorded regions but with different levels of availability. The steepest increase in active job seekers was seen in the capital, followed by the North. The Midlands showed the slowest rate of growth.
Across the contract market, October witnessed the fastest rise in contractor availability since late 2020. London saw the steepest increase closely followed by the Midlands.
A fall in contract extensions was cited, as has the general decline in employer demand for this type of hire.
Pay and salary.
Permanent salaries increased again during October. However, the rate of its inflation maintained the recent downturn. It fell for the 4th consecutive month to the lowest seen since February 2021.
Where pay rose, recruiters reported links to competition for high-quality candidates in key roles.
London saw only a marginal increase in salary, while recruiters in the Midlands noted a marked growth.
Within the temporary sector, the latest data showed a returned improvement in temporary pay rates. Although modest, the marginal lift was the best we have seen since June.
Recruiters believe that where businesses were looking for contract workers, higher calibre candidates were still able to negotiate higher daily or hourly rates.
Once again, the Midlands saw solid growth in pay rates whilst very little change was reported in the South of England.
In conclusion.
Overall, the data suggests that across most of the UK, recruiters are up against it.
Key performance indicators of the market such as vacancies have dropped again. In turn, permanent placements and temporary billings are both falling and contracting in rate.
Broadly, The Midlands is the only area that appears to be seeing some growth. There, recruiters didn’t experience the same shortfalls reported across the rest of England.
That said, London did experience marginally improved performances. Hopefully, this is a predictor of what’s to come.
The late delivery of the Autumn Budget was thought to explain why hiring plans were put on hold in October. While this may have been the case it could be argued that the plans to raise taxes and increase employment costs will continue to be a stone in the shoes of organisations who were planning to hire in 2025.
For more on this, our recent blog explores how raising employment costs will impact hiring positivity.
Absorbing these costs will be expensive and are likely to impact hiring for next year.
Despite these costs, the Office for Budget Responsibility did forecast a rise in productivity. Plans were also revealed that indicate a renewed long-term policy of Government policy of support. Hopefully, businesses will look forward, see some stability on the horizon and act optimistically.
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