What is the current UK Job Market like?
1. Job Openings and Hiring:
- Declines in Placements: The report indicates that in December 2024, there was a significant decline in permanent placements. This marks the steepest fall since August 2023. Temporary billings also fell, showing that companies are pulling back on both types of hiring.
- Vacancies: There has been a prolonged decrease in job vacancies, with December 2024 marking the fourteenth consecutive month of decline in demand for staff. The Total Vacancies Index dropped, reflecting the steepest contraction since August 2020. This reveals a significant drop in the demand for permanent staff, particularly in England.
2. Salary Increases:
- Increased Salaries: Despite the drop in hiring, the report noted an increase in starting salaries for permanent positions, reaching the highest level of growth in four months. This indicates that employers are still willing to offer higher pay to attract and retain high-quality candidates, even amidst a contracting job market. In contrast, the inflation rate for salaries remains below historical trends, suggesting that while there are increases, they are moderated.
- Regional Differentiation: Specifically, London witnessed the steepest increases in salaries, highlighting geographical variations in hiring dynamics.
3. More People Available for Work:
- Increase in Staff Availability: The report states that staff availability has risen significantly in December. This is noted as the sharpest increase since June. This increase in availability is largely driven by a decline in hiring demand and layoffs related to businesses seeking to cut costs.
- Sector-Specific Trends Availability has improved across all regions, led by the Midlands and Northern England, which suggests that while demand is down, more potential employees are entering the job market.
4. Overall Mood in the Market:
- Economic Caution: Jon Holt from KPMG noted that the current market feels muted as demand weakens. Many businesses are "pausing to take stock" due to financial pressures such as rising employment costs and inflation rates. The report reflected caution around hiring intentions, which have dropped at a pace not seen for 16 months.
- Watchful Optimism: Despite current challenges, there’s an expectation that as the UK economy is predicted to grow in 2025, companies may need to ramp up hiring again, particularly if consumer confidence improves.
5. Sector Insights:
- Temporary Roles and Christmas Hiring: The report referenced an ongoing demand for specific temporary roles, particularly in logistics and delivery during the holiday season. Job postings for delivery drivers and couriers saw significant increases, highlighting the importance of flexibility in labor needs during peak times.
6. Regional Differences:
- Variations Across the UK: The report detailed that the demand for job placements varied significantly by region, with notable declines in the North and South of England, while London fared slightly better. The Midlands showed modest growth, suggesting economic conditions are not uniform across the country.
7. Skills Shortages and Surpluses:
- Skills in Short Supply: Specific sectors are facing shortages of qualified candidates. For example, healthcare professionals, IT roles (like data scientists and developers), and engineering positions are reported as areas with high demand but insufficient skilled labor.
- Skills in Excess: Conversely, there are sectors where there is an oversupply of candidates. Roles in business administration and certain technical positions are seeing more candidates than available job openings, which can lead to increased competition for those jobs.
In summary, the report paints a picture of a UK job market that is currently experiencing significant contraction in hiring and job openings, yet still shows resilience through rising salaries for skilled roles and increased staff availability. While companies are cautious in their hiring decisions, potential shifts in economic conditions could open up opportunities for growth in 2025.
Full Report: https://prismrecruitment.co.uk/wp-content/uploads/2025/01/UK-GB_Jobs_ENG_2501_PANEL-Jan-25.pdf
