12:00 PM 8th December 2023
Pay Pressures Ease Further Amid Sustained Rises In Candidate Availability KPMG And REC
Image by Gerd Altmann from Pixabay
The latest KPMG and REC, UK Report on Jobs: North of England survey highlighted divergent hiring trends with regards to permanent and temporary workers in November. Although falling only marginally, permanent placements declined for the fifth straight month, while temp billings moved back into expansion territory in November.
Pay pressures across the region meanwhile eased further. Starting salaries rose at a pace that, though marked, was the slowest in 31 months, whereas hourly wages for temp staff dropped for the first time since November 2020.
Both permanent and temp staff availability increased at historically elevated rates in November, while upturns in vacancies remained subdued.
The KPMG and REC, UK Report on Jobs: North of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the North of England.
Permanent staff appointments decline for the fifth month running
Permanent staff placements across the North of England fell again in November, extending the current sequence of decline to five months. Some recruitment consultancies mentioned that employers were hesitant to commit to new staff, therefore making staff appointments more difficult. That said, the rate of decline was the softest in five months and modest overall.
The decrease in placements recorded in the North of England was much less severe than the drop seen at the UK-level, largely due to rapid falls in London and across the South of England.
After a month of contraction in October, the seasonally adjusted Temporary Billings Index registered above the 50.0 no-change mark to indicate a rise in billings received in November. The increase was attributed to improved temp availability and firmer demand for short-term staff, according to anecdotal evidence. The expansion was only mild, however.
Of the four monitored English regions, the Midlands was the only other area to register higher temp billings in November, with falls seen elsewhere.
November data indicated that the trend of increasing job openings in the North of England was sustained.
Although permanent job vacancies in the North of England rose further in November, contrasting with a decline at the national level, the rate of increase was the slowest since January 2021 and only marginal.
Temp job opportunities in the North of England meanwhile expanded modestly in November, with growth slightly quicker than that seen across the UK as a whole.
Strongest rise in permanent staff availability in three months
Recruiters in the North of England registered an improvement in permanent staff supply during November. Redundancies and greater numbers of workers looking for permanent roles led to higher permanent staff availability, according to panellists. The pace of expansion was rapid, having accelerated to the fastest in three months. That said, the North of England recorded the weakest rise in permanent candidate numbers of all four monitored English regions.
November data pointed to a ninth monthly increase in temp candidate numbers across the North of England. Panellists often attributed the improvement to an increased willingness to carry out temp work and fewer projects among clients. Although strong, the rate of growth slowed on the month to the softest since April.
In line with the trend seen for permanent availability, the North of England saw the slowest rise in temp candidate supply of all four monitored English regions.
Growth of starting salaries falls to 31-month low
Recruiters based in the North of England signalled an increase in starting salaries in November, thereby extending the current period of pay growth which began in March 2021. Survey respondents linked the rise to competition for suitably-skilled staff, with employers offering higher salaries to attract top talent.
Although marked and broadly in line with the UK average, the rise in starting salaries was the weakest since April 2021.
Recruitment consultancies in the North of England registered a decline in hourly wages for temp staff in November, after having recorded increases in each of the prior 35 months. The rate of reduction was the most pronounced since October 2020, albeit moderate overall.
Notably, the North of England was the only monitored English region to report a decrease in temp pay in November.
An uptick in temporary billings in November highlights that businesses in the North are leaning more on flexible workers to cover current workloads, as some employers are hesitant to commit to permanent staff which is having an impact on permanent placements. The survey also showed that pay pressures eased further, which is good for businesses as they grapple with increased costs across the board and it may give them some more confidence when it comes to hiring going forward if the trend continues.
Euan West, Office Senior Partner for Leeds at KPMG UK
Data collected 9-24 November Neil Carberry, Chief Executive of the REC, said:
“2023 has been a testing year in our labour market, with permanent hiring dropping and temporary hiring flat or growing only a little. That’s the story again in this month’s data, though the market is quieter overall as firms start to move activity into 2024 rather than pressing ahead now.
“Pay for temps in the North has risen every month this year and while temp pay has declined in the North in November, that may turn out to be a blip when seen in the context of 35 months of increases. There are greater numbers of workers looking for permanent roles which has led to higher permanent staff availability.
“Anecdote from REC members supports our client survey finding that employers are considering coming back to the market, but that in many cases the activity will be next year. So, while these figures represent a further slowdown in current hiring conditions, recruiters are more positive about the new year.
“For policy makers, any return to growth will put strain on a labour market with embedded shortages – this week’s pro-election rather than pro-economy decision on immigration will exacerbate that. Any return to growth could drive domestically-generated inflation unless we adopt a proper plan for workforce capacity, embracing better welfare-to-work support, finally reforming the Apprenticeship Levy, funding Further Education properly and the kind of support for school leavers suggested by today’s Broken Ladders report from EDSK and REED on the school-to-work transition.”