Given the current economic uncertainty, it is understandable that some employers are being more cautious with their hiring plans. Despite this, we’ve seen a good deal of positivity for both employers and candidates in the current recruitment market. The level of job vacancies remains historically high, indicating that the demand for temporary hires will continue to be strong as we move towards the second quarter.
Permanent placements fall for four consecutive months
Due to economic uncertainty, employers are exercising caution in making permanent hires and turning to temporary workers to fill job openings. While the growth in temp billings was modest, it was the quickest increase since September of 2022.
Employers favour temporary staff
During January, more temporary staff were employed resulting in a 2.5-year long span of growth. Although the rate of growth was modest, it was the strongest seen since September of the previous year. The rise in temp billings was largely due to a preference for short-term staff and the need to fill vacancies in the face of a shortage of permanent employees.
However, there is upwards movement in the growth of demand for staff
According to recent data, the demand for staff in January grew significantly with overall job vacancies growing at the fastest pace in three months. Despite this, the rate of growth was still lower than the long-term trends. While temporary job vacancies increased at a faster rate than permanent staff demand, both saw improvement, with temporary vacancies slowing down and permanent staff demand growing.
The overall number of open positions, as reported by the Office of National Statistics, was 1,161,000, a decrease of 75,000 compared to the three months prior to September. This figure also showed a decline from the record high of 1,300,000 vacancies seen in the three months ending May 2022. However, it was still over 40% higher than the pre-pandemic level.
Starting pay inflation continues to rise
In January, the trend of significant increases in starting salaries continued. Although the rate of inflation had declined from its peak in March 2022, it was still slower than it had been in 21 months. The rate of pay inflation for temporary workers picked up to a four-month high. Recruiters pointed to a shortage of qualified candidates and the growing cost of living as the main factors driving up starting pay and salaries.
Overall candidate numbers fall at a softer, but solid rate
In January, the pace of decline in the number of permanent candidates slowed for the seventh consecutive month. Despite remaining robust, the decrease was the gentlest seen since March 2021 and much slower than the yearly average for 2022. Recruiters linked the drop in the number of candidates to workers' heightened caution regarding job security and the rising cost of living, as well as the uncertain economic outlook. However, it’s worth noting that London bucks the trend here, and the capital has seen an improvement in the number of candidates, making it slightly easier for employers to recruit.
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