Hiring slowdown persists in May, driving a steeper increase in candidate supply

UK Employment Report for May 2023 – Hiring Slowdown persists

Summary

• Permanent placements fall further, temp billings growth eases
• Strongest rise in candidate numbers since end of 2020
• Starting salary inflation slips to 25-month low

Economic uncertainty continues to dampen hiring activity

Lingering uncertainty around the economic outlook and delayed decision-making continued to add to a hiring slowdown midway through the second quarter.  Permanent staff appointments fell for the eighth month in a row and at the quickest rate since January 2021.  Temp billings meanwhile expanded at the softest pace since last October and only slightly.

Total candidate supply expands at steepest pace since December 2020

The overall availability of labour improved for the third month running in May.  Furthermore, the rate of expansion was the sharpest seen for nearly two-anda-half years, with recruiters often linking the upturn to redundancies and a slowdown in hiring activity.  Permanent candidate availability increased at a sharper rate than that seen for temporary staff.  The former rose at the quickest rate for 29 months, while the latter recorded the strongest upturn since February 2021.

Rates of starting pay rise at softer, but still strong rates

The higher cost of living and efforts to attract skilled staff continued to place upward pressure on starting pay during May.  Salaries for newly-placed permanent staff rose at a historically sharp pace overall, albeit one that was the softest seen for just over two years.  Temp pay growth also edged down since April, and was the second-slowest since April 2021.

Vacancies increase at slowest rate in 2023 to date

Growth of demand for staff slowed for the third straight month in May, with overall vacancies expanding at the softest pace since last December. In addition,  the upturn was the second-weakest recorded since February 2021.  Permanent vacancies increased at a faster pace than that seen for temporary roles, but rates of growth were nevertheless the slowest seen for five and 33 months respectively.

Commenting on the latest survey results, Claire Warnes, Partner, Skills and Productivity at KPMG UK, said:

“The jobs market remains subdued, with the latest survey results showing dampened hiring activity amid ongoing economic concerns.  Overall vacancy growth slowed for the third month as businesses delayed hiring decisions, and permanent staff appointments fell for the eighth month in a row as many employers stick to temps.  Businesses ready to grow can feel optimistic about an increasing pool of available candidates, which has expanded at the sharpest rate in two-and-a-half years.

For job seekers there was more demand for permanent workers in the healthcare, financial and accounting sectors.  And while temporary vacancy growth slowed, there are still plenty of opportunities, especially in the hotel and catering industries. It’s a tough time for employers, and what they really need is an upskilled and reskilled workforce which can move between sectors and quickly fill their vacancies. This will in turn aid economic recovery. The Government’s new Local Skills Improvement Fund scratches the surface of the problem, but more needs to be done to urgently address the UK’s widening skills gap.”

Neil Carberry, REC Chief Executive, said:

“We’ve been hearing more and more about differences between sectors in hiring rates over the past few months, and today’s data really highlights this. While hospitality, healthcare and engineering remain strong, construction, IT and retail are all weakening. Despite the overall temporary work market continuing to grow – and permanent hiring declining from the sugar rush of 2022 – the story can vary widely across different businesses as their economic outlook remains unclear.

For hiring businesses, greater candidate availability will help resolves shortages, though inflation means wage growth remains high. In addition, candidates may have to change sectors in their job search, so there is not an automatic increase in candidate supply for shortage roles. All of this puts a premium on getting our response right as businesses – looking at skills development and widening the net of places that firms look for candidates. Recruiters can help with this. “Government can play its part, too. Proper reform of the Apprenticeship Levy to deliver more flexible and effective training options could help speed sector-to-sector transfers, as could greater use of temporary working to help candidates get a start. Regulation also needs to treat temporary work as a positive option – not a second choice.”

How we can help

Overall, the current increase of potential candidates provides employers with a great opportunity to build strong teams that can lead them to success. By taking advantage of the situation and hiring qualified individuals, businesses can create stability for themselves and ensure their continued growth in the future.

Mosaic Search & Selection can be a great resource for businesses looking to find top talent in a tough market. We are experts in the executive level recruitment process, providing expertise on the latest trends and techniques for finding candidates that possess the desired skills and qualifications.  Additionally, we have access to a network of professionals with experience in specialised areas that can help a business find the perfect fit for their organisation. With all these advantages, we can be a great asset to any business looking to fill their most important positions  and can provide invaluable insight when searching for your next critical hire.  Contact us today to find out how we can help you find your next executive level hire.  Mosaic Search & Selection – Specialists in executive level search in the Publishing, BPO and Financial Services sectors.