Jobs Outlook report January 2023.

Recruitment activity is dampened by an uncertain outlook and candidate shortages in January 2023.

Some of the key findings in the latest KPMG and REC, UK Report on Jobs survey were:

– Permanent placements decline, but temporary billings rise further

– Vacancy growth slightly picks up

– Labour supply continues to fall

– Pay pressures remain elevated

 

Growth of demand for staff slightly increases:

In January 2023, recruiters signalled a stronger increase in demand for staff, with overall vacancies expanding at the fastest pace for three months. Temporary vacancies rose at a stronger rate than permanent staff demand, however, there was an improvement in growth for the latter and a slowdown for the former.

 

Permanent placements fall for the fourth consecutive month:

At the start of 2023, lingering uncertainty over the economic outlook and the hesitancy to commit to new permanent hires weighed on recruitment activity. Permanent employee appointments fell for the fourth month in a row, albeit at the slowest pace over this period. Instead, firms have been leaning on temporary hires to fill vacancies. With this in mind, temporary billings rose at the fastest pace since last September.

 

Overall candidate numbers fall at a softer yet solid rate

At the start of 2023, the downturn in total candidate supply moderated further. Although solid, the contraction rate was the softest that has been seen since March 2021 and was much slower than the average of 2022 as a whole.

As well as this, a weaker fall in the permanent labour supply helped to offset a quicker drop in temporary candidate numbers.

 

Starting pay inflation remains strongly elevated

Throughout January, starting salaries continued to sharply climb, and recruiters say that this is due to candidate shortages, as well as the increasing pressure from the ongoing cost of living crisis.

The rate of inflation continued to soften from March 2022’s all-time record. However, it was the slowest seen in 21 months.

Temporary pay inflation reached a four-month high at the start of the year.

 

Sector variations

Rates of vacancy growth in the private sector exceeded those seen in the public sector. The strongest upturn in demand was for private sector permanent staff, while the softest was seen for permanent workers in the public sector.

Sectors that saw a vast expansion in vacancies included: nursing, medical and care, which saw the strongest growth, and hotel and catering saw the weakest.

Similarly, nursing, medical and care topped the rankings for temporary staff demand, as did accounting, financial, secretarial and clerical.

The only sector that saw reduced demand was retail.

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