The recent report released by S&P Global on Monday reveals a significant decline in UK job vacancies, marking the steepest drop since August 2020. This downturn is attributed to increased costs associated with employing staff, largely due to changes in government policies impacting hiring practices.
According to the KPMG/REC Report on Jobs survey, vacancies for permanent positions have plummeted, with the rate of decrease intensifying for the fifth consecutive month. Similarly, the number of temporary workers experienced its most substantial decline since June 2020.
January saw a notable reduction in permanent placements, as diminishing demand for workers coupled with widespread business uncertainty affected the labor market. Permanent placements have been on a downward trend for 28 straight months, with the decline rate remaining largely unchanged from December's 16-month low. Meanwhile, temporary billings have sharply decreased, marking the most significant contraction in over four-and-a-half years since the end of 2024.
Permanent salaries grew at their most modest pace since the inflationary period began in March 2021. Companies were inclined to offer higher starting salaries to attract quality candidates, yet the increased availability of staff exerted pressure on salary growth. Temporary wage rates also saw slower growth.
Both permanent and temporary staff availability improved in January, as reports indicated a rise in redundancies across various sectors.
Neil Carberry, the Chief Executive of REC, stated: "An autumn characterized by fiscal challenges, the complexities of impending tax increases, and limited progress on applying a costly new employment rights framework are all hindering advancement." He further emphasized, "Alongside monetary stimulation efforts for growth, it is crucial now for the Government to provide clearer guidance on how its industrial strategy intends to promote broader economic growth."
