December 2023 saw a continued rise in candidate availability with economic uncertainty causing redundancies and a slowdown in hiring. Total vacancies fell for the third time in four months.
The latest KPMG REC jobs report revealed a reduction in demand for permanent staff for the 15th successive month, after adjustment for seasonal influences, while growth in temporary vacancies eased to a 37-month low. Permanent staff appointments declined at a faster rate than temp billings.
However, less expected was a sharp increase in the rate of salary inflation for temps and permanent positions. Recruiters told researchers that while competition for suitably qualified staff had contributed to further increases in pay, there were indications that employers’ budgets were under greater pressure.
There were some quite significant regional variations within the figures, researchers noted. While the north of England and London recorded higher temp billings at the end of the year, declines were seen in the south of England and in the Midlands.
Although there was an overall further fall in demand for staff, the public sector saw an increase in demand during December – the first rise in public sector permanent vacancies in four months. Temporary vacancies saw the same trend but in reverse – they fell in the public sector but increased in the private sector.
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It means the underlying strength of the jobs market is even weaker than the headline numbers suggest, propped up by Government hiring rather than more fundamental private sector growth.
Worse could be to come. As unemployment rises, it will have knock on effects for other businesses as people who have lost their jobs cut back on spending. This may force more staff cuts in turn, sparking a vicious spiral.
A growing number of businesses are already going under – as many as 2,500 are entering insolvency every month, a rate far above pre-Covid levels, according to official figures.
“Where we are resting our hopes in [is] our jobs outlook survey, which is actually quite positive for the middle of the year,” says Carberry. “But that will take a long time to pull through.”
Ultimately, it may be falling interest rates that decide when the jobs downturn eases. With the Bank holding firm for now, more pain in the short-term seems almost certain.