Report on UK Jobs – March 2023

Report on UK Jobs

The Report on UK Jobs is unique in providing the most comprehensive guide to the UK jobs market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.

The main findings for March are:

Softer fall in permanent placements, while temp billings growth accelerates

The latest survey brought signs of a relative improvement in hiring conditions during March. Although falling for the sixth month in a row, permanent placements decreased at a marginal pace that was the slowest seen over this period. There were reports of clients delaying decisions around hiring due to an uncertain economic climate and tighter budgets. At the same time, temp billings rose at the quickest rate since September 2022.

Candidate availability rises for first time in 25 months

The overall supply of workers increased for the first time since February 2021 at the end of the first quarter. The upturn was supported by modest rises in both permanent and temporary staff availability. A number of recruiters mentioned that a relative improvement in confidence among job seekers had helped to drive the uptick in candidate numbers, though redundancies were also cited as having increased staff supply.

Starting salary inflation remains sharp in March

Recruiters across the UK noted further increases in starting pay for permanent workers during March. Although edging down to the second-slowest for nearly two years, the rate of salary inflation was comfortably above the series average. Temp pay rates likewise rose sharply, albeit with growth easing fractionally to a three-month low. Higher salaries and wages were frequently linked to shortages of specific skills and cost-of-living pressures.

Demand for staff continues to increase

March survey data pointed to a further marked increase in total vacancies, though the rate of growth eased slightly from February’s four-month high. While the number of permanent roles expanded sharply, growth in temp vacancies moderated to a 26-month low in March.

Neil Carberry, REC Chief Executive, said:

“Over the past few weeks, we have seen a bit more confidence among employers, and this is reflected in this latest data. While the temporary market is still growing month-on-month, the permanent market contraction has eased significantly in March. After six months of slowing activity from last summer’s peak, the market is now better described as flat than declining. This is the mark of an economy performing better than was expected at the end of last year, and means it is still a good time to be looking for work, with hospitality, healthcare, accountancy and financial roles all powering ahead.

“The big news is that candidate availability is up for the first time in more than two years. This suggests that, while the market is still tight, it should be getting gradually easier for firms to hire over the next few months. The continuing fast rate of pay growth is likely reflective of the impact of inflation on wage offers, as well as low labour supply. That means increasing pay is likely to persist, despite more people beginning to look for work.

“But this cautious optimism belies the scale of the challenge we face in tackling shortages and addressing economic inactivity. The recent Budget did call out the need to address labour market shortages, but the steps taken fell short of the more comprehensive workforce strategy that is needed if we are to avoid losing two Elizabeth Lines of growth every year from 2024. We need to put the people stuff first. Government can do more – but businesses too need to step up, as our Overcoming Shortages report showed.”