The UK jobs market is finally flashing slowdown signals after running hot for months after the worst of the Covid-19 crisis, a closely watched survey published today reveals.
Firms are moderating hiring campaigns in response to concerns over the UK’s weakening economy and a shortage of workers.
Britain is on course for a recession as soon as this winter, despite the government launching £43bn worth of tax cuts and freezing households’ energy bills for two years at £2,500, economists have warned. Businesses’ energy costs have been partly covered until next March.
According to KPMG and the Recruitment and Employment Confederation (REC), job vacancies grew at the slowest pace since February 2021, dropping to 58.1 in September from above 60 in August.
Worker shortages driven by a rise in people dropping out of the labour market due to long-term illness – likely caused by long Covid-19 or the large NHS backlog – has blocked companies from increasing staffing levels.
A shallower worker pool has also been caused by Brexit curbing immigration, although flows of people from outside the European Union coming to the UK have risen.
Businesses have been hiking starting pay in a bid to lure talent, pushing wages higher. However, the REC and KPMG said pay grew at the slowest rate since June 2021.
Wages have soared this year…
There are signs worker supply is recovering, with the rate of people UK jobs market contracting at the slowest rate since April 2021 last month.
Economists have warned pay growth that is unmatched with productivity improvements could embed high inflation over the long term.
Prices are up 9.9 per cent over the last year, the quickest acceleration in around 40 years, eroding workers’ real pay.
The Bank of England has hiked interest rates seven times in a row, including two back-to-back 50 basis point rises, to 2.25 per cent, partly to cool the steaming labour market.
Permanent recruits expanded at the weakest pace since March 2021. London notched the best increase in the UK, hitting 55.1, the REC and KPMG said.
… but so has inflation
Nurses were the most in demand workers in September.