Stalling London job market sends urgent growth message ahead of March Budget
The jobs market in London has stalled, highlighting the urgent need for the Government to back measures that will boost growth, according to new data published today (Friday 12th).
The KPMG and REC London labour-market pulse check, supported by BusinessLDN, shows both permanent vacancies and permanent placements are declining over the most recent four-month period (September to December 2023).
The report, which is based on data from S&P Global, draws on responses from recruitment and employment consultancies. It shows that the number of vacancies in London fell for the tenth month in a row, and at a sharper rate in London (47.0) compared to the UK (49.2). Any figure below 50 signals a contraction.
Permanent placements in London also fell (48.7) but at a slower rate than November (26.3), which marked the steepest drop in the capital since May 2020 (7.1) when the UK was in ‘lockdown’ during the depths of the pandemic. March 2020 (20.3) and April 2020 (5.2) are the only other months with lower London readings since 1997.
The availability of candidates for permanent work in London increased for 12th month in a row (66.3 versus 59.7 for the UK), and the availability of candidates for temporary work increased for the 13th month in a row (to 60.5 versus 58.3 for the UK). A steady rise in candidate availability suggests a growing need to re-skill the workforce as well as stimulate growth.
Commenting on the new data, Anna Purchas, Senior London Office Partner at KPMGUK, said:
“After a difficult year for the UK economy, London’s labour market remains out of sync: we’re seeing even more Londoners looking for work, with candidate supply rising at the fastest pace since the initial pandemic wave three years ago, while the number of available roles continues to fall.
“Cautious employers in the capital have been reigning in permanent hiring and moving towards temporary staff in a bid to keep their businesses going as they ride out the sustained economic slowdown. However, we are seeing significant variations by sector, with signs of optimism about permanent recruitment in London’s key sectors including construction, education, hospitality and life sciences over the next four to twelve months.
“Businesses want to plan for the year ahead, but the prospect of faltering economic growth means the certainty they need isn’t there right now. Employers will be hoping to hear good news on really focused measures from the Chancellor that will help to reverse the deepening skills gap so that when the upturn does arrive, they can move ahead quickly. Re-training and giving Londoners the skills businesses need, especially digital skills, needs to be high on the agenda in order for London to maintain its global competitive position and help the rest of the UK to prosper.”
Neil Carberry, Chief Executive at REC, said:
“The London job market has remained remarkably resilient in the face of economic headwinds in the past 12 months, but it is clear that permanent hiring has slowed markedly recently. Employers in the capital are tapping into the flexibility of temporary working to keep offering jobs and bring in vital new skills despite the economic uncertainty they face. Pay for both temps and perms is growing, but not at the rates we were seeing a year ago.
“A spring Budget that includes a proper plan for workforce capacity, embraces better welfare-to-work support and reforms the Apprenticeship Levy cannot come soon enough because any return to growth in 2024 will put strain on a labour market with embedded shortages.”
Muniya Barua, Deputy Chief Executive at BusinessLDN, said:
“The protracted slowdown in London’s jobs market is sending a clear message to the Chancellor: he needs to deliver a bold pro-growth package in the March Budget.
“Reversing the decision to scrap VAT-free shopping on goods for international visitors would provide an immediate economic boost. Going further to make childcare more affordable and accessible would help more people return to work. And providing the clarity needed to accelerate housebuilding would help to unlock jobs, growth and more homes for Londoners.”