Review of the UK Jobs Market – January
Welcome to our Review of the UK Jobs Market for January 2023. Each month, we share market insight on the state of the UK jobs market.
You can either read our short blog, or see our infographic.
The main findings were:
- Permanent placements decline, but temp billings rise further
- Vacancy growth picks up slightly
- Labour supply continues to fall
- Pay pressures remain elevated
Weaker drop in permanent staff appointments
January saw a decline in permanent staff appointments for the fourth straight month. Firms have adopted a more cautious approach to permanent staff hires, including longer decision-making and hiring freezes, due to concerns around economic climate. Candidate shortages are also suppressing placements.
Quickest increase in temp billings for four months
January saw the quickest increase in temp billings for four months. This rate of growth has been seen since September. This is generally attributed to a preference for short-term staff as well as efforts to fill vacancies amid a lack of available permanent workers. Steepest increases were seen in London and the North of England.
Growth in demand for staff picks up
The stronger increase in overall demand for staff was underpinned by the quickest increase in permanent vacancies for three months. In contrast, temp staff demand rose at a slightly softer pace, albeit one that still outpaced that seen for permanent workers.
At 1,161,000, the overall number of open roles was down 75,000 compared with the three months to September. Nevertheless, the figure was still over 40% higher than that seen prior to the pandemic (823,000).
Overall candidate numbers fall at softer, but solid rate
As has been the case in each of the past seven months, the rate at which permanent candidate supply deteriorated eased in January. Though solid, the latest reduction was the softest seen since March 2021 and much slower than the average over 2022 as a whole. Fewer candidates largely reflected a more cautious attitude among workers due to concerns over job security amid the cost-of-living crisis and an uncertain economic outlook.
There has been a sustained decline in the supply of temp workers at the start of 2023. A preference for permanent jobs among candidates, low availability of skilled staff and fewer foreign workers all contributed to the drop in supply.
Starting salary inflation slips to 21-month low in January
Permanent starters’ pay continued to climb further in January. The rate of inflation was sharp overall, albeit the softest since April 2021. Candidate shortages, and in some cases the rising cost of living, has pushed up starting salaries. The North of England recorded the quickest increase in permanent pay.
Quickest increase in temp pay for four months
January pointed to a renewed acceleration in the rate of temp wage inflation. The pace of growth was in fact the sharpest seen since September. Competition for scarce workers, as well as efforts to retain staff and higher living costs. The Midlands say the steepest rise in temp pay.
Source: KPMG and REC UK Report on Jobs 8 February 2023
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