Labour market cools heading into 2024
UK companies remain reluctant to hire new staff, amid muted economic growth. A new study from KPMG shows that the number of job openings declined at the close of 2023, while the number of staff placements also remained net-negative.
British businesses have been slowing down hiring for the best part of a year, with many bosses citing data that suggested “lingering uncertainty” over the economic outlook. The trend seems to have conspicuously developed just as wages finally began climbing faster than the rate of inflation – finally giving staff a chance to claw back some of the huge amount of spending power they lost over the previous two years.
Entering the new year, it seems that UK employers remain steadfast in their reluctance to bring on new staff – even as many continue to talk about being in a ‘war for talent’, particularly relating to digitally-capable staff. According to the latest report on the British jobs market by the Recruitment and Employment Confederation (REC) and KPMG, permanent and temporary billings declined at the close of 2023, albeit at a softer rate than November.
The analysis of the market suggested an indexed score for permanent staff placements index rise from 45.6 from 41.6 in November. That still suggests a net-negative for new hires, however, and remains well below the 2022 average of 55.3 – a positive rate of hiring.
Justine Andrew, partner and head of education, skills and productivity at KPMG UK, said, "It’s a muted end to the year for the labour market, which despite some loosening during 2023, continues to be tight. While the data for December shows hiring activity for both permanent and temporary roles fell at a softer rate than the previous month, businesses are still making redundancies and pausing hiring due to a lacklustre economic outlook."
The results were draw from a panel of around 400 UK recruitment and employment consultancies, surveyed in mid-December, and also showed a perceived decline in the number of vacancies. However, the number of permanent staff salaries rose, from 56.0 to 56.5, suggesting there may be a slight rise in long-term thinking when it comes to hiring – and a suspension of short-term projects amid the state of the economy. Looking ahead, this could also suggest that there is hope for things to pick up in the next year.
Neil Carberry, REC chief executive, added, "Recruiters went into 2024 with hope that an upturn is coming, based on feedback from clients. Driving this economic growth would be a huge benefit for us all, leading to more successful firms, higher pay and the ability to cut taxes and fund public services. But the growth must come first."
