UK recruitment frenzy slows in September

In UK News

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The hiring frenzy that drove vacancies in the UK labour market to record levels earlier this year is petering out, according to a survey showing recruitment activity fell to a 19-month low in September.

Last month, placements of permanent staff increased at their slowest pace since February 2021, found a report by KPMG and the Recruitment & Employers Confederation, which represents employment agencies.

This was partly because agencies are still struggling to find candidates, against a backdrop of labour shortages. But Claire Warnes, head of education, skills and productivity at KPMG, said economic uncertainty was making workers more wary of moving jobs — damping growth in vacancies.

“Some employers, even those who anticipate that the recession may be short, are taking steps now to contain costs, including hiring freezes,” she added.

The strongest increase in permanent vacancies was in nursing and care, and in hospitality — areas where labour shortages have been acute — while the construction sector put in the weakest showing.

Demand for temporary workers was higher last month, especially for secretarial, care and hospitality staff and for blue-collar workers, but it had slowed almost to a standstill for temps in executive and professional roles.

The survey — coupled with other data showing a similar slowdown in hiring — adds to evidence that the UK labour market may be on the turn, as the cost of living crisis starts to bite and recession looms.

Real-time data published by the Office for National Statistics on Thursday showed that the number of online job adverts was almost a fifth lower in late September than at the same time in 2021 — with openings for managers, executives and consultants on a downward trend since the start of the year.

However, the REC survey held little relief for monetary policymakers who are concerned that a tight labour market will allow workers to negotiate pay rises to a point that could fuel persistent inflation.

The proportion of recruiters reporting rising starting salaries was still high by historical standards, with employers linking the increases to higher competition for staff and cost of living pressures, the REC said.

Meanwhile, a survey published by the Bank of England on Thursday showed that 59 per cent of companies were still finding it “much harder” than normal to fill vacancies — only slightly fewer than in August — with wages expected to grow by 5.9 per cent on average over the coming year.

“While any economic slowdown this winter will affect the market, the extent of shortages mean that hiring will remain a focus for employers,” said Neil Carberry, REC chief executive. “Failing to address these issues could cost our economy massively in the years to come.”

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