Job vacancies decline at record post-pandemic rate

The number of job seekers has surged, while starting salaries have seen only a marginal increase, according to an analysis of leading survey data. This indicates that the jobs market is struggling to overcome challenges such as higher taxes and low growth prospects.

Recent monthly findings by the Recruitment and Employment Confederation (REC) and KPMG reveal a continued rise in unemployment and job-seeking, likely driven by high redundancy levels and non-replacement of staff across various firms. Using S&P Global’s purchasing managers’ index data for September, a key survey tracking UK economic growth, REC and KPMG researchers concluded that the jobs market has “not yet turned a corner and remains tough.”

This data adds to the criticism of Chancellor Rachel Reeves’ management of the UK economy, almost a year after her first Autumn Budget, which increased taxes on jobs by £20bn through a rise in employers’ national insurance contributions. Industry analysts noted that the increase in temporary job candidates was the second steepest since November 2020, while the growth rate of permanent job seekers was the third highest monthly rise in the same period.

The report also indicated that the permanent placements index was at 44.8, significantly below the neutral 50 mark. There was a sharper decline in public sector vacancies compared to private sector vacancies in both permanent and temporary positions. London experienced a notably concerning drop, with permanent placements falling at the fastest rate since August 2020, following the first lockdown.

The Office for National Statistics reported last month that the number of job postings available in August reached 728,000, one of the lowest figures since spring 2021.

REC and KPMG stated that the downturn in available jobs was the mildest decline seen in a year, though it is unlikely to provide relief for the government or the Bank of England, which are assessing the impact of a weakened jobs market on future inflation. The most significant monthly decreases occurred in the retail, hotel and catering, and professional sectors, posing concerns for both low and high-income workers.

Survey data also showed that the growth rate of starting salaries “rose negligibly” in September due to weaker worker demand and smaller hiring budgets. Temporary pay growth eased to an eight-month low, while starting salaries fell in regions such as the South of England.

Jon Holt, group chief executive at KPMG, commented: “With very little positive news out there on the economy in recent months, and lots of speculation about the Budget, it is understandable that employers are cautious with their hiring. The jobs market has not yet turned a corner and remains tough, but we saw stabilisation in some of the numbers last month. While the public finances provide little room for manoeuvre in November, some clear signals from the Chancellor that build on business confidence will hopefully support renewed hiring as we head into 2026.”

Neil Carberry from REC urged the government to find “practicality” on the Employment Rights Bill to alleviate employer concerns, while stating that further business tax rises in the Budget would be “unaffordable.”