The United Kingdom's job market is experiencing a sustained downturn, marked by a significant increase in redundancies and a continuous decline in job vacancies, according to a new report.
For the 34th month in a row, the number of available work vacancies has fallen, signaling a persistent "jobs drought." This trend, highlighted in a monthly survey by the Recruitment and Employment Confederation (REC) and KPMG, indicates that employers are hesitant to hire due to ongoing economic uncertainties, including the impact of international conflicts and elevated borrowing costs.
The REC-KPMG survey found that the number of individuals seeking new employment rose sharply in August, with redundancies identified as a primary factor. Recruiters also noted a decrease in available job opportunities and growing concerns among workers about job security. The report indicated that demand for permanent staff fell at a steady pace, unchanged from July, while demand for temporary staff decreased after a brief increase the prior month.
Several factors are contributing to employers' cautious approach to hiring. Many businesses cite increased labor costs, including a rise in employer national insurance contributions and significant increases in the minimum wage, as reasons for making hiring more expensive. Additionally, concerns about the implications of new workers' rights regulations are contributing to the hiring freeze. High energy prices, exacerbated by global conflicts, and the prospect of further interest rate hikes are also impacting business confidence.
Despite the overall contraction, there were some tentative signs of a potential shift. The survey data showed a slight increase in permanent placements, the first such rise in four years. Jon Holt, CEO of KPMG, suggested that the government has an opportunity in the upcoming budget to foster positive momentum. He stated that a clear growth plan could provide businesses with greater certainty and stimulate demand in the job market.
Maxine Bligh, interim chief executive at the REC, urged the government to support the job market by easing burdens on businesses. She specifically pointed to the need for greater pragmatism regarding employment rights, particularly concerning the government's guaranteed hours policy. Business groups have expressed concern that this policy, which aims to provide casual workers with contracts based on their recent hours, could discourage employers from hiring temporary seasonal staff during peak periods.