The number of permanent jobs available in the South of England has fallen for the first time since 2020 - but starting pay has increased as firms battle to attract highly skilled workers, new research has revealed.
Businesses in the region are putting hiring on hold amid heightened economic uncertainty, according to the latest KPMG and REC, UK Report on Jobs survey. Recruiters reported a “steep fall” in the number of permanent jobs during December, with companies hesitant about hiring while facing a low supply of suitable candidates.
As a result, companies are relying on temporary staff to fill vacancies instead. Job contraction accelerated to the sharpest rate seen since June 2020 and was the steepest of all four monitored English regions. London was the only area to register an increase in permanent candidate numbers in December, according to the report which was compiled by S&P Global.
The number of people available for short-term roles in the South of England also declined last month. Recruiters often linked the lack of access to temporary staff to the preference among workers for permanent positions, skill shortages and a low unemployment rate.
The rate of starting salaries in the region increased but at the softest rate since April 2021. Those surveyed indicated that pay rose due to competition for workers, the rising cost of living and efforts to secure highly skilled staff. On a regional basis, only London posted a slower rise in starting salaries than the South of England during the final month of 2022.
The seasonally adjusted Temporary Wages Index also signalled an increase in temp pay for the 25th month running in December - but it was the weakest of all four monitored English regions. Candidate shortages were a key driver of pay growth, according to recruiters, though there were also a number of reports of rates levelling off.
Ian Brokenshire, senior office partner at KPMG UK in the South West, said the jobs market looked “less than rosy” at the start of 2023.
"The challenging economic environment continues to constrain the jobs market, as December’s data shows,” he said. “Employers who hold their nerve and continue to invest in skills in particular are likely to benefit most when the economic upturn comes."
Neil Carberry, chief executive of the REC, added: “As we move into 2023, the need to ensure our labour market can deliver economic growth and prosperity should be a critical concern to politicians.
"People telling recruiters they are anxious about moving jobs is a concern in this regard – as a move is a great way to boost pay and build up skills. If people are less willing to move jobs, this could make shortages worse in the near term.”
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