- REC/KPMG: The UK labour market suffered a ‘further deterioration’ of conditions
- Permanent placements contracted at their steepest pace for 15 months
Vacancies declined at the fastest pace in over four years in November amid the fallout from the Autumn Budget, new hiring data suggests.
KPMG and the Recruitment and Employment Confederation, a trade body for recruiters, said its index of demand for employees shrank from 46.1 in October to 43.9 last month, the worst reading since August 2020. Any reading under 50 denotes a contraction in hiring.
The report identified a ‘further deterioration’ of conditions in the UK jobs market last month as the Budget made many firms more reluctant to take on new hires.
Chancellor Rachel Reeves announced in late October that the National Minimum Wage and employer’s National Insurance contributions would rise from next April.
Many companies and trade organisations have warned the measures will lead to higher prices, store closures, and job cuts.
Neil Carberry, chief executive of REC, said: ‘It should be a surprise to no-one that firms took the time to re-assess their hiring needs in November after a tough Budget for employers.’
Not recruiting: KPMG and the REC said the UK labour market suffered a ‘further deterioration’ of conditions last month as the Budget made many firms more reluctant to take on new hires
KPMG and REC’s latest data showed permanent placements contracted at their steepest pace for 15 months, with the South of England registering the fastest drop of any region.
They also revealed full-time vacancies fell across all sub-sectors, while permanent wage growth was ‘little changed’ on the 44-month low reported the previous month.
Jon Holt, chief executive and senior partner at KPMG UK, said the hiring slowdown and the higher availability of candidates in the market could lead to greater ‘downward pressure’ on wage inflation.
He added: ‘This trend will be encouraging for the Bank’s monetary policy committee ahead of the next meeting later this month, although it may not be enough to counter wider inflationary pressures we are seeing in the economy.
‘However, the prospect of further rate cuts through 2025, alongside the Government’s investment plans, both point to improved growth in the near term.
‘This should give businesses greater confidence, which may help stabilise the labour market.’
Figures released last week by HR software provider Employment Hero found that full-time UK employment decreased by 1.2 per cent in November.
Younger people were particularly affected, with 4.8 per cent fewer 18-24-year-olds in full-time work last month relative to October, according to the group’s SmartMatch Salary Report.
Separately, a Bank of England poll of finance chiefs discovered that just over half of companies expected to hire fewer employees and increase prices because of the Budget.
From April 2025, firms are set to pay a 15 per cent National Insurance rate on staff salaries above £5,000, rather than the current 13.8 per cent levy on wages exceeding £9,100.
The UK Government predicts the NI hike will generate £25billion per year, although the Institute for Fiscal Studies think tank believes it will be closer to £16billion.
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