The number of job seekers in the United Kingdom is witnessing a significant surge as companies resort to layoffs and redundancies to downsize their workforces, signalling a concerning trend in the labour market.
The nation’s economy, which has been wobbling under the weight of persistent challenges, including soaring interest rates, has propelled a sharp uptick in job seekers for the eighth consecutive month.
This disheartening revelation comes courtesy of a closely watched survey conducted by the Recruitment and Employment Confederation (REC).
The data from October highlighted a steeper rise in the number of job seekers compared to the previous month, emphasising the ongoing deterioration of the jobs market.
As businesses transition from hiring freezes to the difficult decision of laying off employees, it has become evident that the jobs landscape is undergoing a significant shift.
Big companies are making redundancies
The recent developments come in the wake of several prominent companies initiating mass staff cuts, further underscoring the prevailing economic challenges. PwC, for instance, made headlines when it announced its plans to cut 600 jobs in the UK, marking the latest addition to a growing list of businesses resorting to downsizing. Deloitte also made waves with its announcement of 800 staff in Britain facing imminent job cuts, and KPMG disclosed its intentions to reduce its deal advisory teams by 6 percent.
In a striking sign of power shifting back to employers, starting salary inflation has plummeted to a 31-month low. Commenting on this trend, Claire Warnes at KPMG UK stated, “The sharper rise in available candidates is good news for recruiters, but comes at the expense of employers who are making more redundancies as they tighten budgets due to ongoing high inflation.”
The survey findings further add to the mounting evidence that the nation’s workforce is poised to face a more challenging job market in the coming months. Nevertheless, these developments might be seen as a silver lining by rate-setters at the Bank of England, as they indicate a potential easing of price pressures.
Interest rates are rising
The Bank of England, in an attempt to curb inflation, has raised interest rates 14 times since the end of 2021, making it the most significant hike since the early 1980s. The REC survey suggests that employers continue to exercise caution, with businesses hiring fewer workers on a permanent basis for the 13th consecutive month, albeit at a somewhat slower pace in October.
Concurrently, there has been a modest uptick in companies hiring temporary staff, suggesting a hesitancy to commit to permanent hires until there is a more positive outlook for the nation’s economy. The most notable decline in permanent hiring was observed in London.
Neil Carberry, the chief executive of the Recruitment and Employment Confederation, expressed his view on the situation, stating, “In many ways, the labour market is marking time waiting for the brakes to be taken off growth by the Bank of England.”
In addition, the survey revealed that the number of job vacancies stabilised in October, with recruiters pointing out a discrepancy between the skills possessed by available workers and the qualifications required for advertised job positions. Notably, the demand for new workers saw the sharpest decline in the retail and construction sectors, raising further concerns about the state of the job market in those industries.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.