Whilst the latest surveys highlight that labour shortages remain a problem with many businesses finding it difficult to fill vacancies, there is some evidence that economic uncertainties are causing some to pause recruitment
Labour Shortages
The latest Labour Market Tracker from the Recruitment and Employment Confederation (REC) showed that the number of active job adverts reached 1.85 million in the final week of July 2022. This was a record high for 2022. Nevertheless, the increase was not due to new postings, which remained stable, but was instead caused by the fact that businesses are finding it incredibly difficult to fill vacancies due to labour shortages, so much so that they are remaining open for longer.
New Postings
The number of new postings peaked back in March 2022, when 234,000 were registered at the beginning of that month. During the last week of July 2022, when the number of active job adverts reached the highest level for the year, just 182,000 were new postings. This highlights the scale of the problem businesses are facing with labour shortages in terms of filling existing vacancies.
ONS Data
As we highlighted in a previous article, the Office for National Statistics (ONS) found back in May 2022 that the problem with labour shortages had become so acute, that the number of job vacancies exceeded the number of people available to fill them for the first time ever. The ONS report for May 2022 revealed that the number of job vacancies stood at 1,295,000. However, the number of people who were available to fill those positions, the unemployed, had fallen to 1,257,000. That mean't that the number of job vacancies exceeded the number of unemployed by 38,000.
Recruitment Slow Down
Nevertheless, despite the ongoing labour shortages, there are now signs of a slowdown in recruitment. ONS data shows that the number of job vacancies peaked at a record 1,318,000 back in March 2022, and has now fallen back to 1,294,000 in July 2022 since then. During that time, unemployment has increased by 28,000 to 1,285,000. That means that whilst the number of job vacancies continues to exceed the number of people available to fill them, the amount by which it does so has fallen from 38,000 to 9000.
'Report on Jobs'
Furthermore, the latest 'Report on Jobs' produced by S&P Global for KPMG and the REC for the perriod 12th - 25th July 2022, also detected a slow down in recruitment activity. It found that:-
- The increase in both permanent and temporary appointments is at its slowest in 17 months
- the growth is vacancies is at its lowest in 16 months
- Whilst the supply of available workers continues to fall, the rate of decrease is at its lowest in 15 months
- Starting salaries continue to increase, but the rate of increase is at its lowest in 11 months
Reaction
Commenting on the slow down in recruitment activity, compunded by the ongoing labour shortages, the Deputy CEO of the REC, Kate Shoesmith, stated: "growth in permanent hiring has softened in recent months. We’ve seen that rising fuel and energy prices, inflation and labour shortages are impacting employer confidence. Labour and skills shortages are also restricting opportunities for both the private and public sector to meet consumer demand. Our latest report shows that these constraints could cost the UK economy up to £39 billion a year if we don’t work to fix these issues now."
The Head of Education, Skills and Productivity at KPMG, Claire Warnes, added: "The trend of uncertainty in the UK jobs market of the last few months continues, as overall hiring activity saw another slowdown in July. Given the challenging economic outlook, employers are rightly hesitant about their hiring plans. But to compound this, a lack of suitable candidates and an overall skills shortage in most sectors are keeping starting salaries high. As the cost-of-living crisis continues to bite....workers may well choose to stay where they are rather than risk job security by moving now. So, a focus on upskilling existing workers and attracting talent remains absolutely essential for UK business to play its part in driving forward the economy."
