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.

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.

Topical Question

The crucial topic that employers were looking for from the Spring Budget 2024 was improvements to the tax system to support business investment.  A total of 42% of survey respondents highlighted this as their top priority.  See the survey results below when the REC asked:
Which of the following options, if any, did your business most need to hear about in the Spring Budget? (top priority percentage)
Spring budget topic

The Spring Budget 2024 bought a cut to National Insurance by 2p in the pound for employees and the self-employed, along with a freeze on the salary threshold from when people start paying income tax and national insurance.  Click here for the Spring Budget 2024 in full.

Comments from Industry Expert

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

Following the Budget last week, which didn’t address some of the key drivers of growth like skills,
infrastructure and reducing the cost of investment and employment, all eyes are on the Bank now. Lower interest rates will help build firm’s confidence to invest. 

“The temporary labour market is the unsung hero of the economic uncertainty of recent years. It keeps the cogs of the economy turning amidst uncertainty and labour shortages –but it still needs nurturing. As we approach the General Election, businesses will be looking to politicians for commitment on this, and reforms of regulation that will support it from IR35, to regulating of
the umbrella market and delivering flexibility to the Apprenticeship Levy.”

Please note that the above data may be subject to statistical revisions over time.

March 2024 Update

Welcome to your Recruitment Market Update 2024.

This month, the ONS has announced revisions to the Labour Market Statistics based on newly reweighted estimates from the Labour Force Survey, taking account of the 2021 Census. 

These revisions have identified that the employment rate is slightly lower and economic inactivity is higher than previously thought.   This economic recovery is taking place alongside very low unemployment (3.8%) and continued strong vacancies (930,000) and pay growth (6.2% year on year.)  

In the face of this revised weaker employment data,  the good news is that the labour market is holding up relatively well, with the main issue being it’s not being met by candidate supply.

The Institute for Employment Studies has shared its response to the supply crisis:

“We need to help people out of work to get into work. We need to help those in work, but struggling to stay there and we need to work with employers to fill jobs and support people in them.”

Next month’s Budget provides an opportunity to address these shortfalls.  The Institute for Employment Studies believes a new approach is needed in the longer term as set out in its Commission on the Future of Employment Support.

Hiring and Economic Activity

Good news re the latest forecast from KPMG stating that the UK economy is emerging from stagnation. Staging an early recovery from a technical recession in the second half of 2023, with real GDP growth expected to accelerate to 0.9% in 2025.
KPMG expects a broadly positive inflation outlook – back to the 2% target in the first half of 2024.
Continued growth in active job postings as the latest data highlights 59,723 new job postings, increasing from 1,813,663 to 1,873,386 in February 2024.

Midway through the first quarter of the year, the number of active job postings is settling at 1.8 million.  This represents a robust position, but weaker than the trend we have seen over the last three years.

GDP is estimated to have grown by 0.2% in January 2024, following a fall of 0.1% in December 2023.  GDP growth is currently forecasted at 0.6% in 2024.

Vacancies decreased on the quarter, but are above pre-pandemic levels by 107,000:

The number of payrolled employees is now well above pre-pandemic levels:

Stats at a Glance

  • The estimated figure for payrolled employees for February 24 rose by 20,000 (0.1%) on the month and increased by 368,000 (1.2%) on the year to 30.4 million.
  • UK employment rates are estimated at 75%, this is below estimates of a year ago and down from the last quarter.
  • UK unemployment rates are estimated at 3.9%, above estimates from a year ago, but largely unchanged on the latest quarter.
  • The UK unemployment rate is now projected to be 4.7% until the end of 2024.
  • The UK economic inactivity rate now stands at 21.8%, above estimates from a year ago, and has increased in the last quarter.
  • In the last quarter, estimated vacancies fell by 43,000 to 908,000, however they are still above pre-pandemic levels.
  • There were 203,000 working days lost in January 2024 because of labour disputes.  The health and social work industry showed the most loss.
  • Annual growth in total earnings (including bonuses) was 5.6% in the last quarter and annual growth in employees’ average regular earnings (excluding bonuses) was 6.1%.

Comments from Industry Expert

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

“Today’s numbers are marginally weaker than expectations as the jobs market waits on growth to return. Recruiters report that firms are still ready to move but are taking longer to make decisions about investment and hiring in the face of economic uncertainty. This explains the relatively slow rate of decline, a picture which contrasts with business surveys that show high levels of optimism for later in the year. The Bank of England beginning to cut the base rate would deliver a shot of confidence to businesses and support a likely bounce back in growth this summer.

“Pay growth is weakening at a steady rate, which is likely to fall further when the April 2023 pay awards fall out of the calculation. There is little risk of pay driving inflation to stay higher at this
point.”

Please note that the above data may be subject to statistical revisions over time.

February 2024 Update

Welcome to your Recruitment Market Update 2024.

This month, the REC has shared its 4 key themes to improve the labour market, as part of the Spring Budget on 6th March.  The REC is requesting:  

  1. Regulating for a sustainable and dynamic labour market that supports temporary work by committing to reviewing, and reforming employment laws and taxation.
  2. To boost workforce productivity and reduce labour market inactivity in the short-term by expanding access to training, increasing childcare accessibility and reviewing public sector procurement models.
  3. Understanding the labour market and today’s workers to build a clear and effective industrial strategy, creating a long-term plan for the labour market and to tackle labour shortages.
  4. To support the labour market’s ability to transition and meet future jobs needs by embracing new technologies and meeting demand for jobs related to Net Zero ambitions and other emerging industries.
 
Recognised by the government as the voice of the employment industry, fundamental to the strength of the economy. The REC has issued a full submission – click here.

Hiring and Economic Activity