UK jobs market cools as pay growth eases and redundancies surge while supply of workers rises

The UK jobs market is showing signs of cooling as pay growth eased last month and UK businesses made staff redundant or held off on hiring new workers.

Pay for both permanent and temporary staff rose at the slowest rate for over two years in June, according to the latest labour market survey from the Recruitment and Employment Confederation (REC) and KPMG.

While pay pressures remained ‘marked’, slower wage growth could point to an easing in overall inflation, which in turn could see the Bank of England take more cautious approach to further interest rate hikes.

Pay growth has been cited as a key driver of inflation by the BoE and its governor Andrew Bailey.   

Recruitment slowdown: Firms cut back on hiring of permanent staff in June as uncertainty over the economic outlook continued to weigh

Hiring of permanent staff also slowed sharply in June, as uncertainty over the economic outlook continued to weigh on recruitment decisions.

Firms instead showed a preference for hiring temporary staff, which grew modestly.

Inflation has forced companies to cut jobs and press pause on hiring new staff.

Last week, recruitment firm Robert Walters warned economic turmoil was weighing on candidate and client confidence, as it reported its UK division took a hit amid lay-offs across the tech sector and volatility in the financial services industry.

The hiring slowdown and company layoffs impacted staff availability, with the number of candidates looking for a job rising for the fourth consecutive month.

And the supply of both temporary and full-time workers surged at the fastest pace since December 2020, according to the survey.

Claire Warnes at KPMG UK, said: ‘The sharp upturn in candidate availability this month […] is a big concern for the economy reflecting the effects of a sustained slowdown in recruitment along with increasing redundancies across many sectors. 

Neil Carberry, the REC chief executive, added this was also likely ‘driven by people reacting to high inflation by stepping up their job search, and by some firms reshaping their businesses in a period of low growth’.

‘It’s no surprise, therefore that the rate at which wages are rising has dropped again,’ he said.

REC and KPMG’s permanent placements index showed a reading of 46.4, indicating a slowing in hiring of permanent staff, though the pace of contraction eased from May’s near two-and-a-half-year record. 

The survey, which uses data from around 400 recruitment and employment consultancies, found that permanent placements fell across all four English regions bar the North of England.

However, demand for workers continued to rise across both the private and public sectors, with the exception of permanent roles in the private sector.  

Demand for temp workers rose during June in most sectors, especially from hotel and catering companies.

‘There are still broad skills shortages, with accountancy, construction, teaching and nursing among those sectors struggling to find and retain workers,’ Carberry said.

‘This is despite the supply of candidates across the job market having risen for four consecutive months.’

Warnes said this was the result of an ‘evident mismatch between open vacancies and the skills of available candidates’.

This post first appeared on Dailymail.co.uk