Typically, the summer months bring with them a slowdown in recruitment activity. This year has been no different.
Recruiters from across the UK have reported data which headline that we have seen the steepest drop in permanent placements in the last three years. On top of this, billings from contract or temporary placements have also fallen for the first time since the height of the lockdown in July 2020.
However, Q3 is still a great time to be a job hunter – particularly if you have an in demand or niche skill set. Salary and pay pressures remain sharp, despite there being a rise in the number of candidates looking for work.
The Recruitment Landscape – August 2023.
Here is our more detailed look into the recruitment data from across the UK.
According to the ONS, in the 3 months to July, vacancies fell at an overall rate of 20% YoY.
At this stage, the number of UK vacancies stood at 1,020,000. Job opportunities have been declining since the start of June and this number of available roles is the lowest recorded for 2 years. Despite this though, vacancy numbers remain comfortably above pre pandemic levels – 826k in February 2020.
What do recruiters say about job vacancies?
Overall, recruiters report that the demand for workers increased only slightly in August. It was the slowest increase in job openings since the current period of expansion began 2 and a half years ago.
Within the permanent market there has been a marked slowdown in vacancy growth. The upturn was fractional and the weakest seen in 30 months.
Within the temporary market, vacancies continued to expand at a solid rate. And although they were unchanged from July, they remained below the series average.
Public vs. private sector.
Permanent roles within the private sector remained pretty static, while the permanent demand in the public sector rose modestly.
Temporary requirements in the private sector where highest overall while in the public sector this requirement rose only slightly
Vacancies by sector.
Of the 10 monitored categories, 5 registered a higher demand for people over August. This was led by hospitality and accounting and financial organisations.
The remaining 5 categories recorded a decline. Of these, IT and Computing offered a slight shortfall and mirrored the Executive and Professional category.
Within the temporary and contract markets, vacancies expanded in 7 out of the 10 categories. Once again, this was led by hospitality. IT and Computing also grew but was in the bottom two of the majority.
Demand for skills.
Interestingly, within the IT and Computing sector there was demand for a wider set of skills. Over recent months, the list has featured the same few categories. QA testers, developers and software engineers have all made regular and predictable appearances on the ‘in-demand’ list.
August’s list is broader – perhaps indicating both that the UK tech ecosystem remains strong and that the roles required by tech and digital organisations are diversifying.
As well as the regular features, the skills in demand also include
- AI engineers
- Business Analysts
- Data Analysts
- Business Intelligence
- Cloud Engineers.
Alongside these, the list showed new appearances for social media marketers and ecommerce professionals.
Read about the advantages of hiring tech contractors here.
Recruiters reported a reduction in permanent placements for the 11th month in August. The rate of contraction increased from July and was the sharpest recorded since June 2020.
This was true across all 4 monitored regions of the UK but was led by the Midlands.
A marginal fall in billings ended the three year run of expansion within the temporary market. The midlands were the only region not to record a drop. Both ends of England and London noted the fall.
In the majority, these drops have been attributed to recruitment freezes borne from client hesitancy and an effort to control costs. Recruiters also reported that there is a shortage of candidates with particular skills, and this struggle exacerbated the slow-down of placement activity.
A sharp increase in candidate availability was reported during August. Excluding the pandemic period, August saw the number of job seeking candidates increase at the quickest rate since the mass redundancies of the financial crisis in 2008-2009.
Numbers of permanent job seekers were in softer supply, while there was a steeper increase of contract or temporary workers.
August showed the 6th consecutive month of permanent candidate growth. The rate of growth slowed from July, but was still the 2nd sharpest since December 2020.
London recorded the highest number of candidates seeking permanent jobs, while the South of England recorded the softest.
It’s believed that both a slowdown in hiring activity and increased levels of redundancy pushed up candidate supply.
Since March the supply of temporary or contract staff has been increasing and this run extended over August. The rate of expansion quickened from July and was the sharpest since December 2020.
Anecdotal evidence suggest that company layoffs due to lower project based workloads and hesitancy to hire in the face of economic instability has been to blame.
All 4 regions of England recorded higher numbers of temporary workers, although this was led by London.
Pay and salary.
The ONS data reports an +8.2% annual growth of employee earnings over Q2. This has grown again since Q1 when it reported a +6.1% increase.
Public sector pay hit record levels over the last 3 months, and reached a +9.6% level of growth. Private sector pay also expanded at a sharper pace at +7.9%.
Within the permanent market, there continued to be a rise in starting pay. However, it wasn’t as strong as in previous months and was the joint softest since March 2021.
Despite this flattening, the rate remained sharp and above average.
The north of England noted the highest rates of pay, while the south recorded the softest.
The temporary markets also recorded a rise in hourly and daily rates, and extended the current period of wage growth to 2.5 years. This was true across all regions of the UK, with London recruiters highlighting the steepest rate of increase.
As well as cost of living pressures and skills shortages, salaries are being driven by a new hurdle. In the current economic climate, counteroffers have increased. More and more, they are being used as a tactic to retain staff who have secured a new job elsewhere. Salaries are pushed up by new employers who are trying to counter the counteroffer and secure their hire.
Read our thoughts on counteroffers here.
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