According to new data, hiring activity in the UK fell again in March due to employers continuing to reduce recruitment as a result of economic uncertainty and tighter spending.
The latest UK Report On Jobs from professional services network KPMG and Recruitment and Employment Confederation(REC) recorded further reductions both in permanent placements and temp billings.
The decline in permanent hiring was 30th month consecutively. Recruiters attribute the trend to more cautious hiring strategies and reduced client activity. Temporary billings fell as well, but the rate of decrease slowed down to its lowest in three months. Both permanent and temporary vacancies continued to decline, but at a slower pace than previous months.
Since December 2020, the availability of workers has increased at a rapid pace. Consultants cited redundancies as the main reason for the increase. The availability of both permanent and temporary workers increased, but the latter grew at a faster rate.
Pay pressures have remained historically low, despite modest increases in starting salaries and temporary wages. Some employers paid higher salaries in order to attract the best candidates, but most were restricted by tighter budgets for recruitment and an increased number of available candidates.
Regional trends in hiring and sector performance
Three out of four English regions saw a decline in permanent placements, with the sharpest drop reported in the North. London was an exception with a modest rise in permanent hires. All four regions saw a decline in temporary billings, with the North leading again.
All ten sectors monitored saw a decline in the demand for permanent employees. Retail saw the largest decline in vacancies followed by executive and professional roles, secretarial and clerical positions and retail. Construction saw the least reduction. The temporary demand trend followed the same pattern, with engineering reporting a stable situation and only a slight decrease.
Jon Holt said that the data shows continued economic pressure as businesses manage rising employment costs while also managing global uncertainty.
“While pay inflation is up from the four-year low of last month, the growth in starting salaries still remains below the historical average,” he said. Recent global events have placed pressure on growth prospects in Britain, so we are unlikely to see any improvement in data in the short term.
The outlook remains uncertain due to the cost burden on employers
The labour market is still facing significant challenges despite some signs of stabilisation. The panelists said that employers are cautious and cost-management is more important than expansion. Although some hiring is still occurring, especially in London, overall sentiment is subdued.
Neil Carberry said, Chief Executive Officer of the REC that March had shown early signs of progress. This was due to a slight increase in permanent hirings in London, and a slower decline in temporary billings across the country. Carberry noted that the broader context was also affecting employer sentiment.
He said that the figures were slightly better than expected, given the significant effects of the government’s decision to raise payroll taxes. “These figures are a good indication that the market has potential,” he added.
The US government’s actions in disrupting the global trading system have made the prospects of a hiring boom in 2025 even more uncertain.
Carberry has called for clarity in policy and support to businesses of all sectors, as the costs are increasing at an alarming rate.
He added that the faster we can clarify how the industrial policy will benefit all sectors, the more likely it is that employer sentiment will be stable.
