London’s Hiring Scene Hits a Low: What the Numbers Really Say
It’s almost as if the city’s hiring engine has slipped into a bit of a winter slump. The most recent KPMG & REC UK Report on Jobs shows that February brought a sharper dip in London’s hiring activity, and that’s no small potatoes.
Why the Chill?
- Economic jitters – The looming Budget changes and that nagging sense of uncertainty keep businesses tightening their belts.
- Labour policy shuffle – New rules around National Insurance Contributions and wage tweaks are causing firms to be extra cautious.
- Redundancy wave – More positions are being let go, flooding the job market with plenty of ready-to-go talent.
Permanent Gigs: Down, Down, Down
For the seventh straight month, the number of permanent roles handed out dropped. The decline is the sharpest since the Global Financial Crisis (SR: in the pandemic months) and the weakest rate of contraction in over a year. Still, there’s a glimmer: the slowdown bought some breathing room, hinting that the market might be hitting its lowest point.
Temp Billings: A Rough Ride
Temp placements fell into a 14‑month stretch of decline, the most dramatic since October 2020 for London and the strongest among the four regions tracked. The dip is largely because clients are trimming costs, pausing contracts, or letting them run their course.
Labor Supply: Ups and Downs
With fewer openings, more people are stepping onto the scene. The rush of permanent workers saw a quick uptick, and temporary staff supply surged at the most rapid clip in four years—again, the steepest rise since the Global Financial Crisis.
Salaries: Tugging the Rope
Even as hiring falters, pay for new permanent hires is nudging upward faster than the national average. Firms are pumping in higher starting salaries to win over skilled talent, especially in London where wage inflation spiked in February. Temporary hourly rates had a modest climb too, maintaining a five‑month run of growth.
Key Voices
Anna Purchas, KPMG UK Senior Partner: “Hiring in London melted in February – the spotty macro‑economy and pay tension made firms pull back. But the dip in permanent hires is easing, which might signal a bottoming out as the new tax year kicks in.”
Neil Carberry, REC Chief Executive: “A long winter in the labor market might be easing into spring. The private sector still needs growth‑boosting tactics – especially with upcoming tax hikes and NI changes. Skill shortages linger, but we’re seeing a shift in how firms deploy tech and manage talent.”
Bottom Line
London’s employment market is in a lull, with both permanent and temporary hiring slipping. Yet temp supply is on the rise, and pay pressures remain a factor. Companies might need to revamp strategies to bring in the talent they need while navigating the new labor landscape. The spring of the next fiscal year could mark a turning point, but the path ahead requires careful navigation of the costs and uncertainties on the horizon.
