Yahoo Finance UK pay for new hires climbs at the slowest pace in almost two years
Demand for workers accelerated for the first time in nine months in January but starting pay for people hired for permanent roles rose at its slowest pace in 21 months.
Recruitment activity was still being dampened by an uncertain outlook and candidate shortages in January, the latest KPMG and REC, UK Report on Jobs survey, showed.
The Recruitment and Employment Confederation said cautious employers were relying increasingly on temporary hires.
“January’s recruitment activity suggests that speculation about a shallower economic downturn may be justified,” Neil Carberry, chief executive officer of REC, said.
Billings for temporary workers last month rose at the fastest pace since September, pushing up pay for those workers.
Nursing/Medical/Care topped the rankings of temporary staff demand in January. Accounting/Financial and Secretarial/Clerical completed the top three.
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However, permanent staff hires fell for the fourth month in a row, though at a slower rate than the previous three months.
The reduction in permanent staff appointments was broad-based across the four monitored English regions, with the Midlands seeing by far the steepest rate of decline.
While starting salaries continued to climb sharply, this happened at the slowest pace in 21 months.
According to recruiters, candidate shortages pushed up rates of starting pay, while there were also mentions of the rising cost of living placing upward pressure on salaries and wages.
"Taking into account the high level of activity last summer and autumn, when the permanent slowdown started, activity levels for both permanent and temporary roles are still high," Carberry said.
Bank of England governor Andrew Bailey has said that labour market data would be key for understanding how quickly inflation falls.
The REC boss said the government needs to find ways to bring more people into work after more than half a million people dropped out of the jobs market since the pandemic.
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“From skills to tackling economic inactivity, and from immigration to childcare, there is much that can be done in partnership with business to help our economy grow and workers to prosper,” Carberry said. “Ahead of the budget, the chancellor should put the people stuff first across the whole of government.”
However, Claire Warnes, partner in skills and productivity at KPMG UK, warned that the jobs market remained volatile in 2023, despite the vacancy growth in January.
"But, with the cost of living continuing to place upwards pressure on pay, job security causing low candidate supply and employers relying on temporary staff as permanent placements decline again, the jobs market remains volatile," she said.
The REC survey took place between January 12 and 25 and was based on responses from a panel of 400 recruiters.
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