• Swindon & Wiltshire Economy
• Thursday January 9 2025
• Author Name: Peter Davison

Shock jobs news: South West only region to see decrease in pay in major new report

The South West saw worsening recruitment conditions in December, with steep declines in permanent placements and temporary billings – the sharpest drop in four-and-a-half years.

That’s according to the latest UK Report on Jobs from Big Four accounting firm KPMG and the Recruitment & Employment Confederation.

Redundancies led to an oversupply of candidates, driving starting salaries and temp wages down, making the South West the poorest-performing region and the only one to experience a decrease in pay, says the report.

The report’s authors said anecdotal evidence suggested the downward trend in hiring activity was further exacerbated by the Autumn Budget.

Some businesses were reportedly hesitant to recruit due to the impact of proposed changes to employers’ labour costs, says the report.

“Coupled with an economic slowdown, this has resulted in a notable reduction in hiring of both permanent new hires and temporary workers,” said the report.

Permanent placements seeing the steepest drop in four-and-a-half years, with the South of England emerging as the poorest performer of the four English regions.

The data also showed stronger reductions in vacancies for both permanent and temporary positions. Additionally, with redundancies reportedly contributing to a rapid increase in staff supply, the latest data imply an oversaturated labour market in the South of England.

Commenting on the survey results, David Williams, Bristol Office senior partner at KPMG UK, said:  “It’s not an easy time for jobseekers in the South of England, with December marking the steepest decline in new, permanent positions in four-and-a-half years.

“That said, despite the ongoing impact of increased tax considerations for employers, we know from our KPMG Private Enterprise Barometer that businesses across the UK have ambitious plans for the year ahead and are confident of growth.

“Salaries in the South also saw the most substantial drop since early 2021 – the only part of the UK to see a fall – so employers in the South West will be able to strengthen their teams at a competitive rate.”

Downturn in new permanent joiners at its most marked in 54 months

A twenty-first successive monthly fall in new permanent joiners was recorded by recruiters across the South of England – the South East, South West, and East – in December.

The rate of contraction quickened for a third straight month to the most pronounced in four-and-a-half years and was substantial overall.

Additionally, recruiters in the South of England continued to report the steepest decline among the four monitored English regions, a trend that has persisted since March.

In contrast, London recorded the mildest decline and was the only region where the rate of contraction eased during the month.

The year concluded with a rapid and accelerated fall in temp billings across the South of England, thereby extending the current run of contraction to 11 months. This downturn deepened and was the second-most significant since July 2020, only exceeded by the decline observed in August. The latest decrease was largely attributed to diminished business demand and the Autumn Budget.

Among the four monitored English regions, the South of England experienced the most substantial drop in temporary billings, while the Midlands was the only region to report growth.

Demand for permanent workers recorded a marked deterioration in December. The latest drop in permanent vacancies extended the current run of decrease to 17 months and was the most pronounced since mid-2020.

In fact, all four monitored English regions experienced accelerated declines in permanent vacancies during December, with the South of England at the forefront of this downturn.

Temp vacancies across the South of England were also trimmed at the same and rapid rate as permanent vacancies in December. The rate of decrease gathered pace for a sixth straight month to the fastest since June 2020.

For the second month in a row, all four monitored English regions reported a decrease in temporary vacancies, with contraction rates quickening across the board.

Rapid expansion in permanent staff supply

Recruiters in the South of England reported another month of rapidly increasing permanent staff supply in December. The rate of growth was the fastest in four months, although it was still behind the UK-wide average. According to panellists, redundancies and a decrease in open vacancies were the primary factors contributing to this latest rise in staff supply.

All four monitored English regions experienced stronger rates of expansion in permanent staff availability, with the Midlands showing the most significant increase.

December saw a rise in the supply of temp staff available across the South of England, thereby extending the current growth period to 20 months. While the rate of increase eased to a three-month low and indicated the weakest expansion among the four monitored English regions, it remained rapid overall. Survey respondents noted that redundancies were the primary driver of increased temp candidate numbers.

Temporary staff availability rose across the UK as a whole, with the pace of expansion ticking slightly higher.

Permanent salaries fall at strongest pace since February 2021

After November’s decline in permanent salaries ended a 44-month period of growth, recruiters in the South of England reported another decrease in December. The rate at which starting salaries were reduced was solid, marking the most substantial drop since February 2021. An oversaturated market, coupled with decreased business demand were identified as the primary factors contributing to reductions in permanent salaries.

Once again, the South of England was the only region among the four monitored areas to experience a decline in salaries for permanent new hires. In contrast, the other three regions saw faster increases in permanent salaries in December.

After two consecutive months of slight increases in temporary wages, the fourth quarter of 2024 concluded with a renewed decline across the South of England. Although the pace of the decrease was modest, it contrasted with the solid increase seen on average across the survey and was the most significant since July. The decline was attributed to a cooling economic environment and a highly competitive jobs market.

Among the four monitored English regions, the South of England was the only area to experience a drop in hourly wages for temporary workers. In contrast, the other tracked regions saw increases in temp pay rates, although these rises were mild and historically muted.

Neil Carberry, chief executive of REC, said: “This report emphasises a weak mood in some businesses as they built their budgets for this year, and made changes designed to save on costs after a tough Budget.

“That said, sentiment can change quickly. Recruitment and employment consultancies in the South of England said redundancies and a decrease in open vacancies were the primary factors contributing to this latest rise in staff supply.

“December is always a hiring low point, and a new year brings new hope – with inflation under control, low unemployment and economic growth expected, the fundamentals are better than many appreciate. It is what happens now, as firms return to the market in January, that will decide the path ahead.

“Recruitment is one to watch in early 2025 because it is one of the earliest indicators of a broader economic recovery, with any sign of a turn hugely significant with the sector contributing a massive £44.4 billion to the UK economy in 2023.”

Dan Barfoot, operations manager at Wiltshire- and Bath-based recruitment firm CMD Recruitment said: “These findings mirror exactly what we are seeing locally.

“The next interesting date will be follow the implementation of the new rates of employers’ NI contributions.

“However, there are still plenty of job roles open if candidates will commit to a move.”

Photo by Tim Mossholder at Pexels