Insights

“"In an enduring market that has faced the trials of recent times, this month's report presents a detailed portrayal of resilience and flexibility. While most indicators recorded a decrease, the unwavering persistence of job opportunities instills hope for the future. What truly catches the eye is the notable surge in average fixed salaries, climbing by 7% on a monthly basis and 2% compared to the previous year – a clear reflection of companies' endeavors to bridge skill gaps.

This downturn in indicators is not unexpected, considering the typically subdued trends observed in the month of August. However, taking a wider economic viewpoint reveals optimism, as wage growth outpaces inflation at 7.8%, even though inflation remains below the target. It remains to be seen how these elements will impact the data for November."

“The professional recruitment market seems to be in a slump. Month-on-month and year-on-year data shows decreases in all but two metrics. However, a deeper look at the data reveals some encouraging signs of growth.

The trends in the latter half of July, coupled with recent positive economic news, suggest that more profitable months lie ahead. While nationwide skills shortages and ongoing union-led pay disputes remain a concern, if inflation continues to fall and the economy keeps growing, consumer and business confidence should improve, which will benefit the recruitment sector.

The government also has a role to play in ensuring the UK has a plentiful supply of skilled workers to fill vacancies. A continued focus on training and better visa routes for overseas talent is critical to success."

“The healthcare sector has faced a skills shortage for some time. However, the recent decline in job applications is not necessarily a bad thing. This could be due to the recent public sector pay rises, which may have encouraged some workers to stay in their current jobs.

While this is good news for staff retention, it does not mean that the healthcare sector has enough skilled workers. Retaining workers is only one part of the solution. Attracting new staff is also critical. If the UK is to meet the growing demand for healthcare services, it needs to have access to a global pool of talent.”

““HR has gone through profound changes over the last three years, as the sector first grappled with Covid, remote working and associated issues. The subsequent surge in recruitment meant that departments were under pressure once again, in a way not seen before. Now as the market slows down, HR is facing a new wave of challenges, as the cost of living crisis hits, and business managers are looking to HR for guidance on everything from performance to compensation.
Hence in terms of what we have seen in recruitment terms this year, it is quite up and down. To start with, the 2023 forecast suggests a decrease of -27.7%, resulting in the number of vacancies falling below the 30,000 mark, with an estimated 28,242 positions available.”

““The decline in IT vacancies is not surprising, given the mass layoffs that have occurred in the sector this year as the economy struggles. However, it is important to note that many of these redundancies followed overly optimistic hiring during the post-pandemic boom. The limited pay increases that have been reported across the profession are concerning, given the need to strengthen the UK's tech skills. With the cost of living rising, there is a risk of further loss of expertise unless a more sustainable approach is developed. In our view, this includes reforming international visas to provide more viable entry routes for IT contractors and the self-employed..”

The sluggish growth of the British economy is becoming evident. London has been hit harder than the rest of the country, with a significant decrease in industry vacancies compared to last year.
The slowdown we experienced in the first half of 2023 was expected after a boom in recruitment in 2022. Vacancies across industries have dropped by 24% in Q2 2023 compared to Q1, potentially reaching levels not seen in over a decade.”

“The professional recruitment market seems to be in a slump. Month-on-month and year-on-year data shows decreases in all but two metrics. However, a deeper look at the data reveals some encouraging signs of growth.

The trends in the latter half of July, coupled with recent positive economic news, suggest that more profitable months lie ahead. While nationwide skills shortages and ongoing union-led pay disputes remain a concern, if inflation continues to fall and the economy keeps growing, consumer and business confidence should improve, which will benefit the recruitment sector.

The government also has a role to play in ensuring the UK has a plentiful supply of skilled workers to fill vacancies. A continued focus on training and better visa routes for overseas talent is critical to success."

Although there has been a slight pickup in vacancies during May 2023, we have seen a sharp fall in vacancy numbers since the beginning of the year, particularly between March and April. This downward trend is largely influenced by the prevailing economic uncertainty that has adversely affected consumer spending in the UK throughout 2023. However, we expect demand to begin to increase again now that signs of a recession are behind us for this year at least.

“We expected to see an increase in recruitment in May, but the statistics show that hiring is still slowing down. This could be due to the unusually high number of bank holidays last month. It will be interesting to see how the recruitment market performs in June, especially given the positive news about the UK's economy.

We do not expect to see a significant decrease in the competition for top talent. The labor market is still tight, and recruiters will need to help balance the needs of employers who are looking for high performers on tight budgets with the demands of candidates who are increasingly aware of their power in the market."

The recruitment market is often seen as a bellwether for the wider economy, so the sharp fall in jobs and placements is something that all business leaders and government officials should take note of.

The data suggests that we have moved from a situation where there was a shortage of candidates to one where there is a sharp drop in demand. This is likely due to a number of factors, including the rising cost of living, the ongoing war in Ukraine, and the UK's exit from the European Union.

While the Office for Budget Responsibility (OBR) has said that we have so far narrowly avoided a recession, we could be heading in that direction unless confidence in the economy is restored. And this needs to be underpinned by a strong labor market.

If the economy does enter a recession, it is likely that the recruitment market will suffer even more. This could lead to job losses, increased unemployment, and a slowdown in economic growth.

Some additional details about the decline in the UK recruitment market:

• The number of jobs advertised in the UK fell by 15% in the first quarter of 2023.
• The number of people placed in new jobs fell by 12% in the same period.
• The number of vacancies in the UK is now at its lowest level since the start of the pandemic.
• The unemployment rate in the UK is rising, and is now at its highest level in two years.”