LONDON JOBS MARKET STAYS ROBUST IN THE FACE OF ECONOMIC HEADWINDS, REPORT FINDS
- Average starting salaries in the capital remain high, even with growth in salaries slowing
- 1 in 5 recruiters think there will be an increase in recruiting permanent members of staff, with just under 1 in 10 thinking there will be a decrease (just over half think it will stay the same)
Against an economic backdrop of high inflation and rising interest rates, London’s jobs market looks set to remain robust in the medium-term, with continued demand for staff to plug gaps in skills shortages. That’s according to the first KPMG and REC London labour-market pulse check, supported by BusinessLDN.
The report, based on data from IHS Markit / S&P Global and the responses from 100 recruitment consultancies in the capital, shows that rising cost pressures are competing with skills shortages when it comes to the pace of salary growth, while the economic climate is giving people reason to pause and consider their options, with the availability of permanent staff falling in August.
Looking at separate data from REC, the picture is more robust. Fewer than 1 in 10 (9.9%) of recruiters think that there will be a decrease in hiring permanent members of staff, while nearly 1 in 5 (19.7%) think there will be an increase, with sectors like hospitality expecting a hiring boost ahead of the busy Christmas trading period.
Other key findings:
- Number of recruiters seeing increased salary growth fell slightly to 70.2% — the slowest growth for over a year, but average starting salaries in the capital are still high
- Both temporary (59.7%, down from 64.5%) and permanent (60.4%, down from 62.7%) vacancies in the capital fell in August, both sitting at their lowest levels for 18 months
- Sectors that are likely to report an increase in hiring for permanent positions are hospitality (22.8%), health and social care (32.3%), and education (43.4%).
Commenting on the findings, Anna Purchas, Senior London Office Partner at KPMG UK, said: “Concerns about a possible recession combined with high salary pressures and ongoing labour shortages have created an increasingly challenging jobs market in the capital. Despite all of the challenges, it is positive to see that London employers remain optimistic and want to recruit, investing in people and growth. As good candidate availability continues to slide, businesses may be better able to weather the economic storm ahead through investment in upskilling the available workforce. A long term and sustained focus on investing in skills in London, including reskilling, is now paramount if we want our city’s businesses to be able to grow and continue to be world leading.”
Kate Shoesmith, Deputy Chief Executive, Recruitment and Employment Confederation, added: “The London labour market is strong with lots of vacancies, although there has been the inevitable slowdown since the post pandemic rush. And demand to hire both for permanent and temporary roles is still high. It is impossible to ignore the recent financial markets turbulence and pressures on inflation and therefore salaries — and returning stability to the markets is where we must now focus. To grow, businesses need to hire, and recruitment and growth strategies should be tailored to the region. If done well, the promise of more investment in childcare and devolving skills programmes to local investment zones could unlock growth, and see more people being able to take up the vacancies available.”
Muniya Barua, Managing Director, Strategy and Policy at BusinessLDN, said: “Businesses face a dangerous cocktail of cost pressures. Escalating energy costs, rising inflation and interest rate hikes are affecting both firms and their staff. Add in the skills shortages, and businesses often face a choice between hiring new staff or increasing the pay of the staff they have. Government should also work to ensure that the immigration system is responsive to business demands, when they cannot access the skills they need at home. If the Government is to avoid a recession, it must now take further action on some of the upfront costs that businesses face, so that this demand for talent can be fulfilled across industry.”