Despite the continuing economic uncertainty shrouding the UK, the UK labour market continues to perform strongly. Analysts and official data show that employment is rising while unemployment remains low.
The ONS has also pointed to improvements in the levels of workforce participation. Between December 2022 and February 2023, the number of those in employment improved slightly, growing at a rate of 0.2%. However, it’s worth noting that the number of people who are stll economically inactive remained 0.9% higher than before the pandemic.
Although the workforce has expanded in recent months, the labour market remains tight as demand for staff stays above pre-pandemic levels. Employers are still finding hiring difficult.
The Spring Budget put the challenge of labour availability front and centre of the UK’s growth strategy. The government plan to target the economically inactive and address skills reform. This includes supporting those who may wish to enter (or re-enter) the labour market. Those who chose to take early retirement, parents, and people with disabilities or long-term illnesses, for example.
The defining features of the UK’s labour market are skills shortages and economic inactivity.
But how has the bigger data impacted on-the-ground recruitment? Here is our latest monthly update on recruitment in the UK and how the broader issues are affecting our work.
The Recruitment Landscape – April 2023.
Overall, there was still a strong demand for staff across April. However, the rate of vacancy growth slipped to a 3-month low. This softer upturn was led by a slower increase in permanent vacancies. In comparison, there was a rise in the demand for temporary staff. This sector experienced an upturn in demand.
Here at Ignite Digital we have also had additional requirements for contract hires over recent weeks and can attest to this uplift in the demand for contract workers.
Public vs. Private.
The demand for staff rose across both public and private sectors. The demand for permanent staff in the public sector rose faster than in the private market. Indeed, the requirement for permanent staff in the private sector experienced the softest upturn in demand for 4 months.
Vacancies by sector.
The demand for permanent staff increased in 9 of the 10 monitored industry sectors in April. Engineering topped the rankings, while retail was the only sector to report a negative demand.
IT and Computing -our area of specialism- experienced the lowest level of permanent demand within the sectors that reported positive growth.
The same pattern was true regarding temporary vacancies. Again, only the retail sector reported a drop in temporary vacancies.
The official data.
Official statistics from the ONS show that vacancies fell for the 10th consecutive period in the 3 months to March 2023. However, standing at 1,105,000, the number of open roles is still higher than those recorded just before the pandemic. In the period of 3 months to February 2020, the number of open roles was 826,000.
Demand for skills.
The IT and Computing skills most in demand were the same in the permanent and temporary markets. These were,
- Automation Testers
- Cyber Security Specialists
- Data professionals including data engineers and data scientists.
- Software Engineers
We have also had many recent requirements for those IT professionals who are able to orchestrate an overall technical vision and digital transformation. These include roles such as Solution Architects and Enterprise Architects.
Throughout April there was a decline in the placement activity in the permanent market. Perm placements have fallen in each of the last 7 months, and this latest reduction was the sharpest rate of reduction since January 2021.
It’s thought that our weak economy amid rising costs has been to blame. These conditions have led to recruitment freezes and delayed decisions regarding hiring that have slowed the placements of candidates. In addition, recruiters have reported that a shortage of candidates with sufficient skills has resulted in an inability to fill roles.
This was true across all 4 regions of England, but most prominent in London.
In contrast, the temporary billings increased again in April. This latest rate of expansion was the quickest recorded since September and continued a 33-month run of growth.
The steepest increase in temporary placements was seen in the south of England. Only the Midlands bucked the trend and registered a reduction.
Candidate availability improved for the 2nd consecutive month in April. The underlying data shows that this rise was driven by permanent candidates. There was a softer upturn in those looking for temporary or contract work.
These green shoots are a welcome reprieve for recruiters who have battled with a steady decline in candidate numbers over the past 2 years.
The rate of improvement in permanent candidate availability improved from the scaling we witnessed in March and was the best-recorded growth since January 2021.
This was true across all recorded areas of the UK, with London experiencing the fastest upturn.
Anecdotal evidence suggests that these improvements were being driven by redundancies and the openness of candidates to apply for new, better-paid roles.
Pay and salary.
Contributing to the increase in candidate availability, starting salaries rose again considerably in April. The rate of inflation of was historically sharp and rose to a 4-month high.
The north of England reported the quickest rate of increase although sharp rates were also seen elsewhere.
Temporary rates of pay also improved, and again the quickest were reported in the north of England.
These rises reflect higher costs of living and the desire for employers to attract and secure applicants.
Official pay data.
The ONS reported that overall employee earnings grew steadily at +5.9% in the 3 months to Feb 2023.
This rate of growth was slightly softer in the private sector and was the lowest reported since June 2022. However, for public sector workers, the rate of growth was stronger. These workers experienced their quickest rate of growth for nearly 2 years (+5.3%).
The Recruitment Landscape – April 2023. The highlights.
- Permanent placements dropped at the steepest pace since the start of 2021.
- This drop is thought to be a combination of economic uncertainty, recruitment freezes, skilled candidate availability and business caution over committing to permanent hires.
- Thanks to redundancies and returns to the labour market, candidate availability has improved and is offering green shoots to those employers looking to hire.
- Starting rates of pay have increased again and are also encouraging to active candidate activity in the pursuit of higher salaries.
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