London jobs market stays robust in the face of economic headwinds

Against an economic backdrop of high inflation and rising interest rates, London’s jobs market looks set to remain robust in the medium-term, with continued demand for staff to plug gaps in skills shortages. That’s according to the first KPMG and REC London labour-market pulse check, supported by BusinessLDN.

The report, based on data from IHS Markit / S&P Global and the responses from 100 recruitment consultancies in the capital, shows that rising cost pressures are competing with skills shortages when it comes to the pace of salary growth, while the economic climate is giving people reason to pause and consider their options, with the availability of permanent staff falling in August.

Looking at separate data from REC, the picture is more robust. Fewer than 1 in 10 (9.9 per cent) of recruiters think that there will be a decrease in hiring permanent members of staff, while nearly 1 in 5 (19.7 per cent) think there will be an increase, with sectors like hospitality expecting a hiring boost ahead of the busy Christmas trading period.

Number of recruiters seeing increased salary growth fell slightly to 70.2 per cent - the slowest growth for over a year, but average starting salaries in the capital are still high Both temporary (59.7 per cent, down from 64.5 per cent) and permanent (60.4 per cent, down from 62.7 per cent) vacancies in the capital fell in August, both sitting at their lowest levels for 18 months

Sectors that are likely to report an increase in hiring for permanent positions are hospitality (22.8 per cent), health and social care (32.3 per cent), and education (43.4 per cent).

Commenting on the findings, Anna Purchas, senior London office partner at KPMG UK, said: “Concerns about a possible recession combined with high salary pressures and ongoing labour shortages have created an increasingly challenging jobs market in the capital. Despite all of the challenges, it is positive to see that London employers remain optimistic and want to recruit, investing in people and growth.

“As good candidate availability continues to slide, businesses may be better able to weather the economic storm ahead through investment in upskilling the available workforce. A long term and sustained focus on investing in skills in London, including reskilling, is now paramount if we want our city’s businesses to be able to grow and continue to be world leading.”

Muniya Barua, managing director, strategy and policy at BusinessLDN, said: “Businesses face a dangerous cocktail of cost pressures. Escalating energy costs, rising inflation and interest rate hikes are affecting both firms and their staff. Add in the skills shortages, and businesses often face a choice between hiring new staff or increasing the pay of the staff they have.

“Government should also work to ensure that the immigration system is responsive to business demands, when they cannot access the skills they need at home. If the Government is to avoid a recession, it must now take further action on some of the upfront costs that businesses face, so that this demand for talent can be fulfilled across industry.”

By Mark Adair – Correspondent, Bdaily

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