Vacancies are shrinking at the fastest pace since the pandemic peak as the autumn budget increases hiring costs
- REC/KPMG: The UK labor market suffered a ‘further deterioration’ in conditions
- The number of permanent placements shrank at the highest rate for fifteen months
Job openings fell at the fastest pace in more than four years in November due to the fall budget fallout, new workforce data shows.
KPMG and the Recruitment and Employment Confederation, a trade body for recruiters, say the worker demand index shrank from 46.1 in October to 43.9 last month, the worst reading since August 2020. Any reading below 50 indicates on a decline in the number of recruitments.
The report last month signaled a “further deterioration” in conditions in the UK labor market as the Budget made many companies more reluctant to hire new staff.
Chancellor Rachel Reeves announced at the end of October that the national minimum wage and employers’ national insurance contributions would rise from April next year.
Many companies and industry organizations have warned that the measures will lead to higher prices, store closures and job losses.
Neil Carberry, CEO of REC, said: ‘It should come as no surprise to anyone that businesses have taken time to reassess their staffing needs in November, following a tough budget for employers.’
Not recruiting: KPMG and the REC say the UK labor market faced a ‘further deterioration’ in conditions last month as the Budget made many companies more reluctant to hire new staff
The latest data from KPMG and REC shows that the number of permanent placements has fallen the most in fifteen months, with southern England recording the fastest decline of all regions.
They also revealed that the number of full-time vacancies fell across all subsectors, while permanent wage growth was ‘little changed’ from the 44-month low reported the month before.
Jon Holt, CEO and senior partner at KPMG UK, said the slowdown in hiring and greater availability of candidates in the market could lead to greater “downward pressure” on wage inflation.
He added: ‘This trend will be encouraging for the Bank’s monetary policy committee ahead of its next meeting later this month, although it may not be enough to counter the broader inflationary pressures we see in the economy .
‘However, the prospect of further rate cuts until 2025, alongside the government’s investment plans, both point to improved growth in the short term.
‘This should give companies more confidence, which could help stabilize the labor market.’
Figures released last week by HR software provider Employment Hero show that full-time employment in Britain fell by 1.2 percent in November.
Young people were particularly affected: according to the group’s SmartMatch Salary Report, 4.8 percent fewer 18-24 year olds were working full-time last month than in October.
In addition, a poll of Bank of England chief financial officers found that just over half of companies expected to hire fewer workers and increase prices because of the budget.
From April 2025, companies will have to pay a 15 per cent premium on staff salaries above £5,000, instead of the current 13.8 per cent levy on wages above £9,100.
The UK government predicts the NI increase will raise £25 billion a year, although the Institute for Fiscal Studies think tank thinks this will be closer to £16 billion.
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