2023 has been a year with much for employers to navigate. Confidence in the economy is causing sleepless nights and weighing heavily on employer decision-making.
Inflation, rising interest rates, geopolitics, and supply chain disruption are all factors that have resulted in a disruption to BAU workforce planning and caution toward every hiring and financial decision.
As we ended 2022, particular recruitment reports from the REC (The Recruitment Industry Status Report 21-22 and the Jobs Outlook Dec 2022) highlighted that employer confidence in the economy was low.
A positive Q1 though showed optimism. Companies anticipated an increase in customer demand. Improved business conditions led to an increase in confidence around hiring and bolder decision-making.
Many organisations across tech, finance, and healthcare indicated a renewed appetite to hire. This was demonstrated by The REC Jobs Outlook Report from March 2023, which showed that employer confidence had improved by 19 percentage points from October 2022.
Here at Ignite, we also noticed an extension to procurement demands. Our clients demonstrated a ‘growth mindset’ with a rise in requests for Business Development and marketing professionals.
Looking back over the year, recruiters have seen big shifts in the key indicators of our industry. Perhaps the largest change has been candidate availability which has been particularly marked since the summer. Redundancies amid organisational reshuffles created a pool of active talent looking for work and this trend continues today. The rising costs of living too have encouraged job seekers to look for work that is more competitively salaried.
The Recruitment Landscape – November 2023.
As we approach the end of the year, here is November’s look into UK recruitment and how the middle of Q4 looked for recruiters.
Vacancies.
After a stable October, November saw a renewed fall in the demand for talent. Although the rate of reduction was marginal, this was a notable shift. It was only the second time since February 2021 that overall vacancies have fallen.
Within the permanent market, demand fell for the third consecutive month with the rate of decline being the most pronounced in almost 2 years.
However, short-term vacancies expanded but only at a modest pace that equalled October’s 5-month low.
Public vs Private sectors.
Perm vacancies fell in both the public and private sectors, with the public sector noting the quicker rate of decline.
Looking at the temporary market, there was an overall upturn in demand for staff. However, across both markets the rate of growth slowed in November. Within the private sector, the upturn was small, with the rate of growth moderating to a 6-month low. In the public sector, demand for temporary workers continued to decline.
The ONS.
The official data from the ONS confirms the experiences of UK recruiters. Giving further evidence that demand for staff has fallen, vacancies stand at 957000; a drop of 58000 in the 3 months to October 2023.
Since June 2022, UK vacancies have fallen continuously on a 3-month rolling basis. This latest figure is the lowest recorded since Q2 of 2021 but is still 16% higher than pre-pandemic numbers.
Vacancies by sector.
Demand for permanent staff fell across 50% of the recorded categories. IT and computing was a sector that recorded a fall but wasn’t as marked as the other reduced sectors.
This was a trend that was echoed in the temporary market.
The following areas were skills that were in demand across both permanent and contract markets.
- AI
- Cybersecurity
- Data professionals
- Developers
- DevOps
- IT Infrastructure
In addition, we have noticed an increase in the requirement for more experienced tech and digital talent. For example, 3rd line IT support and senior IT roles.
Placements.
Permanent placements.
Recruiters reported that there was a further drop in permanent placements throughout November. This stretches the current period of decline to 14 months. On top of this, the rate of contraction accelerated and was the 2nd sharpest since the height of the pandemic lockdown in June 2020.
Temporary billings.
Billings for temporary staff fell in November. Although it was small, this was only the 2nd time that billings had dropped since July 2020.
Recruiters report that these losses were largely down to a drop in employer confidence in the economic climate that has led to recruitment freezes, lower organisational activity, and project halts.
Across the permanent market, London recorded the steepest drop in placements while the Midlands and the North of England saw a marginal increase.
The temporary sector saw divergent trends and experienced a 50:50 country divide. The southern half of the country (London and the South) felt a drop, while the top half (the Midlands and the North) were more buoyant.
Candidate availability.
The UK experienced the sharpest increase in staff availability in 3 years.
Availability of permanent staff has expanded in each of the last 9 months, but November’s rise was the sharpest since December 2020. This rise has been linked to a continuing surge of redundancies and people seeking higher paid roles at the hands of rising living costs.
The availability of temporary staff also increased at a fast and accelerated pace in November and again was the most pronounced in 35 months. Recruiters attributed this to fewer projects, organisational budgetary pressures, and company layoffs.
These trends were true across all 4 areas of the UK and were led by the South.
Pay and salary.
Permanent salary growth moderated in November. While still strong overall, the rate of growth was the softest recruiters experienced in 32 months. Salaries eased in London, the South, and the North of England. The only area to report a leap was the Midlands.
The main driver of salary growth was believed to be the same as in previous months – the competition for skilled candidates.
Looking at rates of pay for temporary and short-term staff, there was a continuing rise in salary.
However, the rate of inflation slipped to a modest pace and was the slowest seen since the growth began in March 2021. London experienced the quickest increase, with the North the only region to register a decline.
The ONS and pay.
The ONS reported that total salaries across the UK expanded at +7.9 over Q3 of 2023. This growth has dropped however and is down from +8.4% in Q2.
This slowing was most notable within the public sector (+8.6% in Q3 vs. +10.7% in Q2).
Public sector figures from Q2 are somewhat artificial though thanks to 1 off payments made to workers across the NHS and other civil service sectors at this time.
Within the private sector, there was also a drop – but nowhere near as large; +7.7% in Q3 down from +7.8% in Q2.
Join us in the New Year when we’ll look at how the year ended and delve into December’s recruitment data. If you are interested in the changes 2023 has experienced within recruitment, you can find our previous reports here.
Are you considering hiring new tech and digital talent in the new year?
We can help – reach out today.
