• Swindon & Wiltshire Economy
• Tuesday March 11 2025
• Author Name: Peter Davison

Demand for workers fell and wage growth stalled in February, says new report

Regional demand for workers during February fell at the fastest rate since the summer of 2020, new figures suggest.

The latest UK Report on Jobs: South of England survey from KPMG and the Recruitment and Employment Confederation recorded “historically sharp declines” for both permanent placements and temp billings, with recruiters often noting a reduced appetite for hiring amid a weaker economic environment and rising payroll costs.

The availability of workers meanwhile continued to climb sharply, which was often linked to redundancies.

As a result, both starting salaries and temp wages were stagnant in February.

The KPMG and REC, UK Report on Jobs: South of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the South of England, including Business Biscuit partner CMD Recruitment.

Recruiters based in the South of England signalled a drop in permanent staff appointments for the twenty-third month in a row during February.

The rate of contraction was sharp, despite easing further from December’s four-and-a-half-year record.

There were frequent reports of more cautious hiring policies amid subdued economic conditions and higher payroll costs.

The downturn in the South of England was more severe than that seen across the UK as a whole, with only the North of England registering a quicker drop.

Commenting on the latest survey results David Williams, Bristol office senior partner at KPMG, said: “February saw all the hallmarks of a challenging job market continue across the South of England, with declines in both permanent placements and temporary billings.

“Taken alongside rising payroll costs and broader macro-economic conditions, employers remain understandably cautious.

“As increased redundancies lead to a greater availability of candidates for a decreasing number of job vacancies, businesses in the South hold the hiring power.

“With starting salary inflation remaining on the lower end of the scale, many management teams are still well-placed to bring in talent in a cost-friendly way while also continuing to do their bit to upskill employees at a time of significant technological advancement.”

Neil Carberry, REC chief executive, said: “After a long winter, there are some hints of a turn in the labour market in the UK as we head into Spring.

“This is led by the private sector in the UK – despite recent tax rises – and that should not be missed. The job market is tougher in the South of England than in the rest of the country right now but the fall in temp billings in the South of England was the softest since last November.

“Enabling companies to grow is at the heart of our prosperity – the Chancellor must use the Spring Statement to build their confidence in growth.

“At the moment, though, things are still slow as companies hold their breath in the face of significant costs rises from April with changes to National Insurance and the National Living Wage.

“Getting the Industrial Strategy flying is a key part of this – for the whole economy, not just key sectors – as is addressing policies in the Employment Rights Bill so they do not prove to be a brake on growth.

“Despite a long slowdown, some sectors still face skill shortages and this is especially so in the South of England.

“This comes from mismatches, training gaps and the impact of an ageing population. Addressing productivity through technology and better management will be critical to addressing this, and recruitment firms will be key partners for businesses in changing their approach.

“Pay growth is easing and broadly unchanged across much of the country which should please the Bank of England rate setters.”

Locally, recruitment specialist CMD Recruitment, which has offices in Bath and Wiltshire, said the jobs market is feeling more unsettled this year than the first years following the pandemic.

“Businesses are under financial pressure,” said operations manager Dan Barfoot, “and the jobs market is sure to be affected by the next Budget, although whether that’s positively or negatively depends on Rachel Reeves.”

Photo by Tiger Lily at Pexels

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