The United Kingdom's job market is experiencing an extended period of contraction, with work vacancies declining for the 34th month in a row. This persistent jobs drought is characterized by an increase in redundancies and a slowdown in hiring by employers, according to a monthly survey by the Recruitment and Employment Confederation (REC) and KPMG.
New figures indicate that employers are hesitant to expand their workforces due to ongoing economic uncertainty, fueled by factors such as the war in Iran and elevated borrowing costs. Concurrently, the number of individuals seeking employment is on the rise, a trend attributed in part to an increase in redundancies.
Many businesses cite rising labor costs, including increases in employer national insurance contributions and minimum wage hikes, as reasons for scaling back recruitment efforts. Concerns about the impact of new workers' rights regulations also contribute to employer caution. High energy prices, exacerbated by the conflict in Iran, and the prospect of further interest rate increases are also weighing on the economy.
The REC-KPMG survey revealed that the number of individuals seeking new employment rose at its fastest rate in three months during August. Redundancies were noted as a significant factor contributing to this trend, alongside reduced job opportunities and concerns about job security.
Overall demand for staff has seen a continuous decline for 34 months. Permanent vacancies fell at a steady pace, consistent with July's figures, while demand for short-term staff decreased after a brief increase in the prior month. Despite the broader contraction, there were nascent signs of a potential market shift, as permanent placements saw a slight increase, marking the first such rise in four years.
Jon Holt, CEO of KPMG, commented on the situation, stating that the jobs market continues to contract. He highlighted falling vacancies, an increasing number of job seekers, and employers exercising caution in recruitment due to geopolitical uncertainty and high borrowing costs. Holt suggested that upcoming government fiscal decisions offer an opportunity to foster positive momentum by presenting a clear plan for economic growth, which could provide businesses with greater certainty and stimulate demand in the labor market.
Maxine Bligh, interim chief executive at the REC, urged against complacency in the job market. She called for government action to reduce burdens on businesses, advocating for a more pragmatic approach to employment rights, particularly regarding the 'guaranteed hours policy.' Business groups have expressed concerns that this policy, which aims to provide contracts to casual workers based on their recent hours, could discourage employers from hiring temporary staff during peak seasons, such as the Christmas period.