Recruitment Market Update 2024

Bringing you the latest industry updates regarding the temporary and permanent employment market with our Recruitment Market Update 2024. Including a collection of data sourced from the Recruitment & Employment Confederation (REC), CIPD, KPMG and the Office for National Statistics (ONS). We hope you find it informative and a source of valuable information. Please note that the data may be subject to statistical revisions over time.

May 2024 Update

Welcome to your Recruitment Market Update 2024.

Fantastic news for the UK economy as the latest official figures show we are no longer in a recession, bouncing back with stronger-than-expected growth of 0.6 per cent in the first quarter of 2024 – the strongest of all G7 economies comprising France, Germany, Italy, Japan, USA, UK and Canada.

A recession is a significant, widespread, and prolonged downturn in economic activity. A common rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth indicate a recession. 

UK inflation has continued to fall, now standing at 2.3%, just short of the Bank of England’s target of 2%.  This marks its lowest level in almost three years and stands markedly below the US and Canada.  Falling inflation is expected to lead to a cut in interest rates later this year.  It’s hoped that these measures will continue to keep the market stable allowing businesses to make growth decisions in the future. Industry analysts are predicting that the UK’s growth rate is expected to increase throughout 2024:

Hiring and Economic Activity

Combined with continued employer demand, the number of active job adverts remains above 1.7M, identifying that hiring activity has not fallen in the same way that it did in previous recessions.
The number of active job postings in April 2024 was 1,731,378, a decrease from the previous month, but still above pre-pandemic figures.

Pay rates picked up during April as companies remained willing to increase wages to attract suitable candidates.  The latest data signals that pay has now increased for both permanent and temporary staff for 38 months in a row.  
For permanent workers, the rate of growth accelerated to its highest in the year-to-date, though remained below its historical trend.  Temporary staff saw their pay rates rise at the steepest pace since June 2023.  Permanent and temporary billings remain steady, as below:

Candidate availability continued to rise in April, with the rate of growth for all staff hitting its highest for five months.  This reflects in the higher number of redundancies, whilst also signalling a general increase in the number of people looking for work.  
Rates of growth in candidate availability were similarly strong for both permanent and temporary staff.

Stats at a Glance

  • The estimated figure for payrolled employees for April 24 decreased by 85,000 (0.3%) on the month, but increased by 129,000 (0.4%) on the year to 30.2 million.
  • UK employment rates are estimated at 74.5%, this is below estimates of a year ago and down from the last quarter.
  • UK unemployment rates are estimated at 4.3%, above estimates from a year ago and up on the latest quarter.
  • The UK economic inactivity rate now stands at 22.1%, above estimates from a year ago, and has increased in the last quarter.
  • In the last quarter, estimated vacancies fell by 26,000 to 898,000, however, they are still above pre-pandemic levels.
  • There were 22,000 working days lost in March 2024 because of labour disputes.  
  • Annual growth in total earnings (excluding bonuses) was 6.0% in the last quarter and annual growth in employees’ average regular earnings (including bonuses) was 5.7%.

CIPD - Labour Market Outlook

May sees the latest Labour Market Outlook report released by the CIPD, produced four times a year in February, May, August and November, providing analysis on employers’ recruitment, redundancy and pay intentions, combined with unique insights on labour market topics.    Highly respected within the employment industry; we’ve summarised a few key points here:
  1. Over half (55%) of employers are looking to maintain their current staff levels.  This is the highest proportion since winter 2016/17.
  2. 37% of employers surveyed have hard-to-fill vacancies.  
  3. The percentage of employers in the private sector that plan to recruit in the next three months is 62%.
  4. One in five employers (20% anticipate significant problems in filling vacancies in the next six months.  This is comparable with last quarter, when it was 21% of employers.
  5. Half of employers have responded to hard-to-fill vacances in the last six months by upskilling more existing staff (52%).  Raising wages (41%) and increasing the duties of existing staff (36%) were also common responses to covering the gaps left by unfilled roles.  Three in ten (29%) of employers have also improved their policies to support health and wellbeing in the last six months.

Click here for the full report:  CIPD Spring Labour Market Report

CIPD - Recommendations

  • Re-examine your approach to addressing hard-to-fill vacancies by broadening your talent pool through inclusive recruitment and selection approaches, look for ways to increase your employee value proposition (EVP) to make your organisation more appealing to potential candidates.  Click: Interview techniques to increase diversity and Why gender-neutral language improves recruitment ads
  • If you are looking to maintain staff levels, make strategies to improve retention a priority.  Provide a robust benefits package, development and intentional career opportunities, flexible working arrangements etc.  Clearly demonstrate your commitment to fair and transparent policies, sustainable practices and responsible leadership.
  • Employees may still be struggling with rising living costs.  Therefore, it remains crucial to support employee financial wellbeing.

Comments from Industry Expert

REC response to ONS labour market figures, May 2024. Neil Carberry, REC Chief Executive said: 

The UK jobs market has remained remarkably robust in terms of low unemployment and high employment, despite the recession.  On the surface, this is good news.  But as we return to growth it could be a problem.  Unless we can better tackle inactivity, including long-term health issues, and find ways to be more productive with technology and skills, the UK will not grow as it could.  

Given that higher growth is the secret sauce for lower taxed and better funded-public services, every party should have the workforce at the heart of its thinking.  And every company needs to be thinking about how they hire and deploy staff in partnership with professional recruiters.’

April 2024 Update

Welcome to your Recruitment Market Update 2024.

UK inflation fell to 3.2% in March, its lowest level in two and a half years.  A very different picture to the mighty levels of 11.1% reached in October 2022, a record 41-year high.  This fall, combined with wage growth, will work to make the cost of living more affordable.  

Lower inflation will also help companies to grow by providing a more stable and predictable environment.  Allowing for more job opportunities, as businesses use market stability to empower them to make growth decisions about their future.

The Bank of England and the Office for Budget Responsibility (OBR) predict that the UK’s annual inflation rate will continue falling, though more gradually than in 2023.

Inflation

Hiring and Economic Activity

The employment market is reacting to more positive signals of growth this spring.  The number of active job postings in March 2024 was 1,908,641, an increase of 35,255 on February figures.  This data suggests a gentle rise in hiring activity since the winter as economic confidence rebounds with caution.  As a leading indicator for the jobs market, this underscores more hopeful economic predictions for the summer.
vacancies

Starting salary levels for both permanent and temporary workers continued to increase in March, with higher pay offers reflecting efforts to attract higher calibre candidates.   Despite this increase, permanent staff salaries rose at the weakest rate in over three years, whilst the increase seen in temporary staff wages, was the slowest seen in four months.
The latest survey data from the REC shares that employers are planning to seek support from agency workers.  When asked – Do you think the number of agency workers in your organisation will increase or decrease in the next 4-12 months?  Employers responded as below identifying forecast demand for agency workers increasing by 15%.  This is driven by a notable spike in the last month of the quarter.  Forecast demand was strongest in London (+31) and in the South East (+32).
Employers use of agency workers

Stats at a Glance

  • The estimated figure for payrolled employees for March 24 decreased by 67,000 (0.2%) on the month, but increased by 204,000 (0.7%) on the year to 30.3 million.
  • UK employment rates are estimated at 74.5%, this is below estimates of a year ago and down from the last quarter.
  • The highest employment rate estimate in the UK was in the South East (78.3%) and the lowest was in Wales (69.1%) for the three months ending February 2024.
  • London saw the largest increase in the employment rate compared with the same period the previous year, increasing by 1.2%, with Wales seeing the largest decrease of 2.8%.
  • UK unemployment rates are estimated at 4.2%, above estimates from a year ago and up on the latest quarter.
  • The highest unemployment rate estimate in the UK was in the East Midlands (5.9%) and the lowest was in Northern Ireland (2.2%) for the three months ending February 2024.
  • The UK economic inactivity rate now stands at 22.2%, above estimates from a year ago, and has increased in the last quarter.
  • In the last quarter, estimated vacancies fell by 13,000 to 916,000, however, they are still above pre-pandemic levels.
  • There were 106,000 working days lost in February 2024 because of labour disputes.  The health and social work industry showed the most loss.
  • Annual growth in total earnings (including bonuses) was 6.0% in the last quarter and annual growth in employees’ average regular earnings (excluding bonuses) was 5.6%.

Increase in UK Wage Rates

This month sees statutory increases in The Minimum Wage and The National Living Wage.  From 1st April 2024, The Minimum Wage for those aged 16-17 increased by 21.2% to £6.40 and The Minimum Wage for those aged 18-20 increased to £8.60, an increase of 14.8%.   
The National Living Wage rose from £10.42 to £11.44, a 9.8% increase.  This is the third largest annual increase in its history.
LW 1
LW 2

In October 2023, the Living Wage Foundation announced the 2023/2024 Real Living Wage rates of £12 across the UK and £13.15 in London.   Based on real living standards in the UK and London, Real Living Wage employers have until 1st May 2024 to implement the new rates.

Gender Pay Gap

Estimated Gender Pay Gap data released by the ONS identified that the gender pay gap fell for all occupational groups from 2022 to 2023, with the largest fall coming from skilled trade occupations.  Data below for full-time median gross earnings by occupation, UK April 2022 and April 2023:
Gender pay gap

Click here for the full Gender Pay Gap in the UK 2023 report from the ONS.