July marks the start of Q3 – and with it comes a few green shoots on the recruitment horizon.
Data from the latest REC JobsOutlook survey suggest that employer confidence in the UK economy is showing signs of improvement; to -41 in May-July 2023 from -43 in February–April 2023.
Although this is still in negative territory, the longer form data shows that this change in employer confidence has been on an upward journey for a few months now. In support, a separate survey by the Confederation of British Industry showed that confidence among businesses has improved over the first half of the year for the first time in two years.
These improved levels of confidence have had knock-on effects on the hiring activity among employers. The REC’s Labour Market Tracker reflected strong demand for new staff.
Redundancy and restructuring.
Amid economic uncertainty, increased redundancies have also affected key recruitment metrics. In the 3 months to May 2023, UK businesses made 95,000 redundancies. This figure is the highest we’ve experienced since the height of the first national lockdown in November 2020. What’s more, 25% of UK companies estimate that they’ll have to make redundancies throughout the end half of 2023.
Redundancy has created a lift in candidate numbers and while this offers recruiters cause for hope, it hasn’t translated into permanent placements. Employers are still struggling to fill roles and are having to look to recruiters for advice on the demands of candidates. Acting as consultants, anecdotal evidence suggests that recruiters are helping to redesign roles to satisfy job seeker requirements.
Are you a job seeker looking for a new job following redundancy? Read our advice here.
Let’s look beyond the overview. Here is the key ‘need to know’ of July’s recruitment data.
The recruitment landscape – July 2023.
Although vacant job role numbers have increased, there has been a sustained slowdown in the rate of the demand for staff. This rate of growth is the slowest we have seen in the most recent period of recovery which began in March 2021.
This was broadly true across both the permanent and contract markets, with permanent roles seeing the softest increase in 29 months.
The contract market also moderated but recruiters have reported that this area of hiring remained solid.
Public vs private sector.
Recruiters reported higher levels of staffing demand from their private sector clients than those working in the public sector. The strongest levels of demand were for temporary roles within the private sector, and the weakest was for temporary workers within the public sector which rose only marginally.
Areas of industry such as hospitality, retail and the blue-collar sector were those most in need of staff. Brexit and inflexible immigration policies are hitting these areas of the private sector the hardest, creating an arena in which filling these types of roles is challenging at best.
Vacancies by sector.
Within the IT sector, the demand for permanent staff weakened in July and dropped substantially compared to the same period last year. Within the temporary market, demand remained level and equalled the same period last year.
Demand for skills.
Permanent skill demands.
These are the skills that were most in demand within the IT and computing sector.
- Cloud engineers
- Developers and software engineers
- Cyber security professionals
- Data scientists.
These are job roles which reflect the ever-evolving nature of tech. It doesn’t surprise us that each of these professions is on the list. These are all areas which propel businesses. They enable progression, reflect digital transformation and our reliance on data and security.
Once, these types of roles were only the domain of tech organisations.
Today, digitisation and data dominance are sweeping across all areas of industry. Non-tech companies are also in a position where they require these professionals. This has fuelled the demand, and within a sector already plagued by skills shortages, it makes finding suitable candidates more difficult.
Temporary skill demands.
The list of the required IT and computing skills within the contract market is much the same. However, Automation Testers are also in demand here.
We can certainly support these lists. Our open roles feature jobs for professionals that fall into each one of these categories.
Are you a tech, digital or data job seeker looking for a new opportunity? Browse through our open jobs here.
As we mentioned in the introduction, recruiters reported that their permanent pipelines witnessed the fastest drop in placements since June 2020.
43% of recruiters on the panel found this to be true vs. only 27% who registered an increase.
This was true across all 4 areas of the regions included within the survey and was led by our London peers.
Recruiters cited that the economic outlook along with the ongoing skills shortages contributed to the fall in their ability to place permanent candidates.
In contrast, temporary billings rose again in July. This adds another month to the current 3-year run of growth. However, this rate of expansion was the weakest we’ve witnessed in 9 months and was only slight.
It’s believed that candidate preferences for permanent roles plus a general softening of demand were contributory factors to the slowing of this side of the market.
Within the areas of the country covered by the survey, the Midlands and London registered an increase in contract billings. The north and the south of England sandwiched this more central region and reported a drop in their temporary numbers.
In our conversations with candidates in the resourcing stages of our work, we are finding that historically steadfast contractors are more open to permanent roles than ever before. Digging deeper, their new consideration of permanent roles lies in job security and the enhanced protection that permanent work offers.
The total supply of candidates rose again in July. This lift reflects a 5th consecutive month of growth. Notably, month-on-month, July saw the fastest rate of growth since the end of 2020. What’s more, if we exclude the pandemic period, this upturn was the most pronounced since October 2009.
The supply of permanent labour has risen in each of the last 5 months. Redundancy, restructuring and a slowdown in hiring have reportedly fuelled this increase.
All 4 regions of the UK agreed, with London seeing the quickest rate of candidate availability.
There was also an upturn in temporary candidate numbers across July, although this market didn’t see as rapid a rise as the permanent sector.
The reasons for the increase mirrored those within the permanent sector. Once again, London saw the steepest increase in contract candidate numbers and the south of England, the weakest.
Once again, the salaries paid to permanent new starters increased at the start of Q3. However, the rate of this increase was the softest since April 2021.
The increase has once again been attributed to the increased cost of living and the organisational competition for candidates amid skills shortages and an abundance of roles.
The north of England saw the most rapid rate of inflation, while London-based recruiters experienced the weakest.
Hourly rates paid to workers within the temporary sector also expanded in July. Although it was still solid, the rate of inflation was the slowest in the last 29 month sequence of rising pay.
The ONS says…
The ONS reports that in the 3 months to May 2023, the average annual pay growth was +6.9% – up from +6.7% in the 3 months to April 2023.
This lift was the quickest rate of expansion on record.
More detailed official data shows that these rates of pay growth hit near-record highs across both private (+7.1%) and public (5.9%) sectors.
Pay in real terms…
This ONS data puts salary inflation at 7.3% during April and May 2023, with the annual growth in average regular pay (excluding bonuses) among UK employees reaching its highest point since the pandemic.
However, in real terms pay pressure will continue. The Consumer Prices Index for example, cites that owner occupiers’ housing costs (CPIH) rose by 7.3% in the 12 months to June 2023. While wages are rising, price increases are generally outpacing this growth.
For more details on recent recruitment activity, head to the Industry News section of our blog.
Are you struggling to fill your tech, digital or data jobs? We can help.
Reach out to us today to find out more about how we work.