- Latest London labour market pulse check shows permanent vacancies have now fallen for 16 consecutive months, with permanent placements continuing to drop since last recording growth in September 2022.
- Starting salaries in the capital growing at fastest rate since November 2023.
- Majority of recruiters expect permanent placements and temporary hiring to remain stable this quarter.
Permanent vacancies and placements across London are falling as businesses tread cautiously on recruitment despite early signs that the economy is picking up pace. 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 189 recruitment consultancies in the capital, shows that permanent vacancies dropped again in June – with a reading of 47.6 – and have now been in negative territory for 16 consecutive months. Any reading above 50 marks expansion whilst any reading below indicates contraction. Permanent placements also continued to drop (46.6), with the latest figures marking 21 months since the last positive reading in September 2022.
The trend is resulting in a bigger pool of permanent and temporary staff available in the labour market (with readings of 63.2 and 60.5 respectively).
Meanwhile, starting pay for Londoners and temporary rates both ticked upwards compared to the last release in April 2024 when they grew at the slowest rate (53.6 and 50.2 respectively) since Covid restrictions were in place over three years ago. This time around they posted growth of 58.4 and 55.5, with the former being the highest reading since November 2023.
Anna Purchas, Vice-Chair and London Office Senior Partner at KPMG UK, said: “London’s labour market has been at a standstill as employers delayed investment decisions until the outcome of the general election was decided. Despite a rise in candidates available for work, skills shortages in some sectors remain and employers are willing to pay a premium to secure the best candidates on the market. This shows why the skills agenda needs to be at the heart of any economic growth plan coming from Westminster. With a new Government coming together, providing more certainty on the political path ahead, improving skills and attracting highly skilled workers to London must be a priority. Employers in the capital continue to take a cautious approach to recruitment, but with the economy improving it will hopefully prompt London businesses to take their foot off the brakes and look to start executing investment and growth plans.”
Kate Shoesmith, Deputy CEO at the Recruitment & Employment Confederation, said: “Employers were clearly waiting for the outcome of the general election before pressing on with hiring. It’s now time to break out of that holding pattern, with the election over, inflation down and the expectation of lower interest rates in time. Businesses still say staffing and skills shortages are their major pain points, so the new Government can make big strides forward if it can provide further clarity on the proposed Industrial Strategy and Back to Work plans. Engaging with employers as policy is developed is essential. For example, employers don’t want to be tied up in red tape when it comes to recruiting, so developing the Employment Rights Bill in close consultation with labour market experts is of paramount importance if we are to unlock the future growth potential in the UK DzԴdz.”&Բ;
Muniya Barua, Deputy Chief Executive 91, said: “With the London jobs market stuck in a rut, the new Government is right to focus on working with employers to kickstart the economy. Labour has made a promising start with plans to reform the apprenticeship levy and the creation of Skills England to help more people into work. When it comes to its proposed changes to workers’ rights, it will be important to strike a balance between maintaining flexibility for individuals and firms, while also encouraging investment into the UK and protecting employees.”
Separate data for the capital from REC’s Jobs Outlook shows that the majority (69.3%) of London-based recruiters expect permanent placements to remain stable over the coming three months, whilst 26.5% expect to see an increase and just 3% a decrease. It is a similar picture for temporary agency workers, with the bulk of recruiters (72.6%) expecting hiring to remain the same, 24.0% expecting to see an increase and only 2.4% a decrease.
Across sectors, over a third (36.5%) expect to see an increase in permanent placements over the next three months across hospitality as the sector gears up for the summer holiday season. Other sectors expecting strong hiring growth include industrial (34.8%), engineering and technical (33.3%) and sales and retail (27.9%).