Yahoo Finance Redundancies surge and pay growth slows as UK jobs market cools
Pressure on starting pay starts to ease
UK businesses are slowing down hiring and pay increases just as the number of people looking for work rises.
The Recruitment and Employment Confederation (REC) and accountants KPMG said increases in starting salaries for permanent and temporary staff were the weakest since April 2021.
Staff availability rose for the fourth month in a row, with the supply of both temporary and full-time workers surging at the fastest pace recorded since December 2020.
The survey, which uses data from around 400 recruitment and employment consultancies, reported that “companies continued to hesitate to take on additional staff in June”.
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"This is likely driven by people reacting to high inflation by stepping up their job search, and by some firms reshaping their businesses in a period of low growth," Neil Carberry, REC's chief executive, said.
Recruiters said companies became reluctant to take on new staff in June amid a weak UK economic outlook, particularly as the rising cost of living and competition for skilled workers have pushed up wages.
Claire Warnes, a partner at KPMG UK, said: “The sharp upturn in candidate availability this month — the highest for two and a half years — is a big concern for the economy, reflecting the effects of a sustained slowdown in recruitment along with increasing job losses across many sectors.
She said it appeared that employers were favouring temporary hiring over permanent jobs because of “lingering economic uncertainty”.”
Read more: High street struggles as shoppers scale back in June
Temporary hiring, which often rises when firms are uncertain about the economic outlook, increased moderately.
Slower wage growth could help soften the Bank of England’s approach to tackling inflation.
The Bank of England has raised interest rates 13 times, from 0.1% in December 2021 to 5% last month and is tipped to raise them to between 6% and 7% by the end of the year.
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