Britain’s jobs market showed further signs of strain in May as vacancies fell to their lowest level in five years and employers continued to pull back on permanent recruitment amid economic uncertainty.
New labour market data suggests businesses are becoming increasingly cautious about hiring, with permanent placements falling at the fastest rate in ten months while demand for workers continued to weaken. Temporary hiring proved more resilient, however, as employers sought greater flexibility in an uncertain economic environment.
The latest KPMG and Recruitment and Employment Confederation (REC) Report on Jobs found that permanent placements have now declined for 44 consecutive months, the longest period of contraction since the survey began in 1997. Recruiters reported that low business confidence, rising costs and uncertainty over the economic outlook were causing many organisations to pause recruitment plans.
Permanent hiring slowdown deepens
The report found that permanent placements fell at the quickest pace since July last year, with recruiters reporting that employers were delaying or cancelling hiring plans. Some also pointed to increased labour costs constraining recruitment budgets.
Vacancies, meanwhile, continued to decline across much of the economy. The report recorded the fastest reduction in overall vacancies for three months, driven largely by a steeper fall in permanent job opportunities. Temporary vacancies also declined, but at the slowest rate in 22 months.
Figures from the Office for National Statistics showed there were 705,000 vacancies across the UK in the three months to April, down 7.1 percent on a year earlier. The total was the lowest recorded in exactly five years and, excluding the pandemic period, the lowest in more than 11 years.
Jon Holt, group chief executive and UK senior partner at KPMG, the professional services firm, said employers were becoming increasingly cautious.
“Ongoing global and domestic uncertainty is making businesses more cautious, and that is increasingly reflected in hiring decisions,” he said. “While some employers are turning to temporary contracts to retain flexibility, many permanent hiring plans are being delayed or put on hold.
“Businesses need stability to plan and confidence to invest. With both still under pressure, the medium-term outlook for jobs remains subdued.”
More candidates compete for fewer roles
The slowdown in hiring coincided with another sharp increase in the number of people seeking work.
Recruitment consultancies reported a substantial rise in candidate availability during May, driven by redundancies, fewer job opportunities and growing concerns about job security. Availability of temporary workers increased at the fastest rate for six months, while permanent candidate numbers also rose strongly.
Despite the weaker recruitment environment, employers continued to report skills shortages across a range of occupations, including engineering, healthcare, information technology and professional services roles.
REC chief executive Neil Carberry said uncertainty was continuing to influence hiring decisions.
“The clearest story in the economy right now is momentum being held up by uncertainty. In the jobs market, that is where temporary work comes into its own,” he said. “With businesses tapping the brakes on permanent hiring in the face of higher costs, the Gulf crisis and new employment red tape, temporary work is making up the gap.”
The report was compiled by S&P Global from responses gathered between 12 and 22 May from a panel of around 400 UK recruitment and employment consultancies.
William Furney is a Managing Editor at Black and White Trading Ltd based in Kingston upon Hull, UK. He is a prolific author and contributor at Workplace Wellbeing Professional, with over 127 published posts covering HR, employee engagement, and workplace wellbeing topics. His writing focuses on contemporary employment issues including pension schemes, employee health, financial struggles affecting workers, and broader workplace trends.
- William Furney
- William Furney
- William Furney
- William Furney
