According to a report, hiring activity in the UK has slowed amid uncertainty about the economy.
July saw the slowest rise in the number of permanent positions held for 17 months.
According to KPMG, recruiters are becoming more cautious when it comes to hiring new employees.
The consultancy added that ongoing skills shortages, a decline in foreign workers and applicants’ reluctance to change jobs have resulted in a tighter supply of suitable staff.
The slowing of the post-pandemic hiring wave comes as the Bank of England warned the UK will fall into recession in the final quarter of this year. The bank hiked interest rates from 1.25% to 1.75% to curb rising prices.
The jobs report from KPMG and the Recruitment and Employment Confederation suggested rising operating costs and uncertainty about the UK’s economic outlook are prompting some companies to slow hiring, at least for permanent positions.
But the rising cost of living and stiffer competition for a smaller pool of qualified candidates also meant that starting salaries continued to rise in July.
“The trend of uncertainty in the UK labor market over the past few months continues,” said Claire Warnes of KPMG.
“Employers are right to be hesitant about hiring plans… Therefore, a focus on upskilling existing workers and attracting talent to the UK economy remains absolutely essential to playing its part in stimulating the economy.”
It’s still a good time for job seekers – the number of advertised positions has continued to rise. However, the strongest rate of increase in vacancies was for temporary positions in the hospitality industry.
“With the outlook being painted by the Bank of England…one might wonder why anyone would even consider a job change,” said Michael Hewson, chief market analyst at CMC Markets.
“Consumer confidence is already at record lows and prices are likely to continue rising, leaving businesses and consumers likely to face further challenges. Let’s see what the government has in store to navigate us through the winter months.”
The Bank of England expects the economy to contract in the last three months of this year and to contract further into the end of 2023, signaling the longest downturn for the UK economy since the 2008 financial crisis.
Jeevun Sandher, an economist at Kings College London, said: “Those who can and want to work generally work. That’s great news.” But he added: “The problem we face is that if you have a job, you don’t make enough to get out of poverty. Even before this cost-of-living crisis, nearly 70% of adults in poverty lived in working households. It’s gotten a lot worse – half of us are now restricting eating.”
He added that workers should demand “the highest salaries possible”.
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