UK job market takes a hit amid economic instability in 2023
The UK job market experienced a downward trend towards the end of 2023 due to continuing economic instability, causing a drop in business confidence, as outlined in the latest Report on Jobs by KPMG and REC.
Despite increasing numbers of available candidates, job vacancies diminished for the third time in four months during December. Recruitment agencies reported decreased hiring patterns and an increase in redundancies, which resulted in a larger pool of full-time and part-time job seekers. Conversely, the demand for skilled labour led to a rise in the overall starting pay in December.
Derek Mackenzie, CEO of Investigo, stated: "As we enter 2024, businesses must turn to skilled staff to boost organisational productivity and drive overall business growth despite the uncertain economy."
"Using the technology sector as an example, the sharp rise in AI adoption in 2023 didn't wait for the economy and businesses must be equipped to harness the next innovation as part of their digital transformation journey."
He went on to warn of the challenges the increased supply of staff could bring, emphasising the need for their effective integration. He said, "Hiring through means such as flexible contracts or entry-level positions can be a cost-effective way of onboarding new tech talent, while training schemes to promote upskilling and reskilling can help existing staff fill senior roles."
"Organisations must continue to focus on people despite economic turbulence, unlocking their skillsets and empowering them to lead growth."
The four regions in the UK tracked by KPMG and REC- the Midlands, North, South, and London - all reported a decrease in permanent staff appointments in December, with the Midlands suffering the greatest decline. However, the reports found that the fall in permanent placements and temp billings was less severe than in November.
Sjuul van der Leeuw, CEO of Deployteq, stressed the integral role tech skills should play across all industries in 2024. He said, "In a sector such as marketing technology, innovations are continuing at a rapid pace and businesses and agencies need access to highly skilled tech staff to support the creative vision of brands." He further emphasised the need for organisations to invest in recruiting and training skilled workforces to drive innovation.
Despite competition for qualified staff pushing up starting pay, the survey revealed that employers' budgets were under significant strain due to economic uncertainty.
Justine Andrew, Partner and Head of Education, Skills and Productivity at KPMG UK, commented on the survey results and provided a picture of what the near future holds for the labour market.
She said, "It's a muted end to the year for the labour market, which despite some loosening during 2023, continues to be tight. While the data for December shows that hiring activity for both permanent and temporary roles fell at a less sharp rate than the previous month, businesses are still making redundancies and pausing hiring due to a weak economic outlook."
