UK Job Market Update: Decline in Permanent Placements
In August 2024, a report produced by REC highlighted a prolonged downturn in the UK job market as permanent staff placements continued to decline in July, marking nearly two years of ongoing contraction.
Permanent and Temporary Staff Placements Decline
The latest data from the REC, UK Report on Jobs indicates that the downturn in permanent staff placements persisted into July, albeit at a slower pace than in previous months. Recruitment consultants cited a reduced number of vacancies and subdued demand for staff as key factors driving this trend. Additionally, temporary billings also experienced a decline, though the reduction was marginal. Many firms opted not to renew or replace expiring temporary contracts, contributing to the overall decrease in staffing.
Salary Increases Despite Fewer Appointments
Despite the decline in staff placements, companies continued to raise salaries for permanent positions in July. While the rate of salary inflation was slightly softer than in June and below the survey's historical average, firms remained willing to offer higher starting pay to attract suitable candidates. This trend highlights ongoing challenges in finding qualified workers. Temporary pay rates also saw a slight increase, though the rate of inflation was the weakest in nearly three and a half years, reflecting higher availability of temporary staff.
Demand for Staff Shows Marginal Decline
The demand for staff in the UK job market saw a marginal decline in July, extending the current period of contraction to nine months. However, the pace of reduction was slower than in June, suggesting a slight easing in the downturn. Notably, there was a divergence in demand between permanent and temporary roles. While demand for temporary staff showed slight growth, permanent staff vacancies experienced a modest contraction.
Increase in Staff Availability
The availability of candidates for both permanent and temporary positions continued to rise in July, although the rates of growth were softer compared to June. This increase in staff availability is attributed to a combination of higher redundancies and reduced demand for workers, signalling a shifting dynamic in the job market.
Regional and Sector Variations
The report also highlighted regional disparities in job market performance. Permanent placements fell most sharply in the South of England, while London experienced a modest increase. Temporary billings rose in the Midlands and the North of England but fell in London and the South.
Sector-wise, the strongest growth in permanent staff vacancies was seen in Nursing & Medical Care, followed by Engineering. Conversely, the IT & Computing sector faced the steepest decline in permanent staff placements. For temporary positions, vacancies increased across seven sub-categories, with Blue Collar and Engineering roles leading the growth. Executive & Professional roles, however, saw the most significant decline in temporary vacancies.
Conclusion
The ongoing decline in both permanent and temporary staff placements, coupled with rising redundancies and softer demand for workers, paints a challenging picture for the UK job market. While firms continue to offer higher salaries to attract suitable candidates, the overall outlook remains cautious as the market adjusts to shifting economic conditions and regional variations in demand.
