Pay Growth Increases, Employers Prefer Temp Staff

January 9, 2024 thehrobserver-hrobserver-paygrowth-employers

The latest KPMG and REC, UK Report on Jobs London survey highlights a further decline in permanent placements in December of last year.

Alternatively the survey shows that a renewed rise in temp billings was recorded, with clients displaying greater preference for variable labour over permanent staff.

The KPMG and REC, UK Report on Jobs: London is compiled by S&P Global from responses to questionnaires sent to around 100 recruitment and employment consultancies in London.

Survey responses are collected in the second half of each month to understand the direction of change compared to the previous month. A diffusion index is then calculated for each survey variable.

“ While the data for December shows hiring activity for both permanent and temporary roles fell at a softer rate than the previous month, businesses are still making redundancies and pausing hiring due to a lackluster economic outlook,” said Justine Andrew, Partner and Head of Education, Skills and Productivity at KPMG.

According to Andrew, this trend has driven a further decline in permanent job opportunities, while there is a rising number of people looking for new work.

“For those lucky enough to start a new role there was another sharp increase in starting salaries due to competition for skilled workers. But the rise wasn’t as high as those seen in recent months as businesses face ongoing pressure on their budgets,” she added.

Businesses worldwide are facing pressure in 2024 to catch up with an increase in pay amid an increse in supply of talent as well.

“Recruiters went into 2024 with hope that an upturn is coming, based on feedback from clients. Driving this economic growth would be a huge benefit for us all, leading to more successful firms, higher pay, and the ability to cut taxes and fund public services. But the growth must come first,” explained Neil Carberry, REC Chief Executive.

According to the survey the latest acancies data further reinforces the changing labour preferences, as demand for permanent staff declined at a solid pace, compared to a third consecutive monthly rise in temp vacancies and the most pronounced in nearly a year. 

Nonetheless, December data also indicates marked expansions in the availability of both permanent and temporary staff amid increased reports of redundancies and non-renewal of contracts. Meanwhile, pay pressures moderated. 

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