- Latest London labour market pulse check shows starting salaries growing at weakest rate since February 2021
- Permanent vacancies fall for 13 consecutive months
- Majority of recruiters expect permanent placements and temporary hiring to remain stable this quarter
Starting pay for Londoners is rising at the slowest pace since Covid restrictions were in place over three years ago, as firms ease back on hiring in the face of a weak economy. That’s according to new data published today by KPMG and the Recruitment and Employment Confederation (REC), supported by 91.
The London labour market pulse check, compiled by S&P Global and incorporating responses from 207 recruitment consultancies in the capital, shows that although starting permanent salaries and temporary rates grew last month – with readings of 53.6 and 50.2 respectively – the pace of growth is at its slowest in 37 months. The figure for new permanent placements in London is in line with the national picture (53.3), while the reading for temporary rates is below the UK-wide figure (53.7).
It comes off the back of a slowdown in hiring, with growth in permanent placements in the capital remaining in negative territory (44.5). Although this was an improvement on the previous month (39.3), and better than the corresponding UK performance (43.3), this marks the 18th consecutive month where a reading of less than 50 was registered, signalling a contraction. The trend is resulting in a bigger pool of permanent and temporary staff available in the labour market (with readings for availability standing at 59.0 and 61.8 respectively).
Looking at separate data for the capital from REC’s Jobs Outlook, the majority (77%) of London-based recruiters expect permanent placements to remain stable over the coming three months, whilst 14% expect to see an increase and 8% a decrease. It is a similar picture for temporary agency workers, with the bulk of recruiters (65%) expecting hiring to remain the same, 29% expect to see an increase and only 2% a decrease.
Commenting on the new data, Anna Purchas, Senior London Office Partner at KPMG UK, said: “The persistent economic uncertainty has meant employers delaying investment decisions, including hiring staff, and we’re seeing this slow down wage growth. Whilst the economy remains sluggish businesses will continue to proceed with caution about hiring, but they do have plans in place and ready to execute, particularly in sectors such as engineering and technology, as soon as confidence in the wider economy returns. Until that confidence improves, sensible employers continue to invest in retaining staff and upskilling their existing workforce.”
Kate Shoesmith, Deputy CEO at the Recruitment & Employment Confederation, said: “Given that London’s labour market is a lead indicator for national performance, this data adds further weight to calls for the Bank of England’s Monetary Policy Committee to loosen its grip in the near-term future. Pay growth has slowed significantly for both permanent starting salaries and – crucially – on temp pay rates. Every business needs a clear, immediate signal that it would be worthwhile to invest now for future growth. We also need a new approach to skills from government, starting with the long overdue reform of the Apprenticeship Levy.”
Muniya Barua, Deputy Chief Executive at 91, said: “With Mayoral elections only two weeks away and a general election looming, it’s imperative that the next Mayor and central Government pull out all the stops to free the UK from its low-growth trap. In the face of a slowing labour market, improving skills must be at the heart of any growth plan. That’s why we’re calling for a new London-wide Careers Service to consolidate existing support, reform of the Apprenticeship Levy to increase take-up and further action to make childcare more affordable and accessible.”