Layoffs creating bigger pool of jobseekers, recruiters say
More people were added to the large pool of jobseekers in March than at any point since the pandemic, according to recruiters, as high levels of redundancies are driving a “steeper rise” in staff availability.
Employers have come under greater strain in the months since Chancellor Rachel Reeves’ announced a £25bn national insurance tax raid on firms, which came into effect last Sunday.
Now a new joint survey by the Recruitment and Employment Confederation (REC) and KPMG suggests that the jobs market took a turn for the worse in March.
Redundancies drove the biggest rise in the number of jobseekers since late 2020, recruiters said, pointing to a likely deterioration in UK unemployment.
The Office for National Statistics said unemployment levels held steady at 4.4 per cent in February but leading economists, including those within the government and at the Resolution Foundation think tank, have questioned the validity of its labour market data.
Recruiters and employment consultancies told REC and KPMG researchers that fewer job opportunities also contributed to a rise in the number of people available for work.
The broad survey also showed that month-on-month hiring activity has been slowing consecutively for two-and-a-half years. London was the only region to see recruitment pick up as a gap between the North and the capital city widened further.
Vacancies also fell last month, with jobseekers looking for permanent positions more deeply affected. March was the 19th month in a row that demand for permanent staff had dropped.
The figures are likely to come as a headache for Reeves as she seeks to reverse the UK’s low growth outlook and get people into work.
REC chief executive Neil Carberry said: “Given the substantial effects of the government’s decision to increase payroll taxes hugely, these figures were if anything slightly better than expected and suggest that there is potential in the market.
“Activity in the UK jobs market has now been subdued for almost two and a half years.”
‘Unlikely that we will see an improvement’
Recruiters claimed there was a high demand for skills in various key service sectors including IT and accounting.
The types of jobs recruiters claimed there were shortages in included financial analysts, auditors and software engineers.
KPMG’s group chief executive Jon Holt said behaviour among employers had vastly changed as higher taxes and compliance with Labour’s controversial Employment Rights Bill were set to add to costs.
“With cost management a focus, those employers who are hiring are focused on securing the best talent,” he said.
Holt added that there was little cause for optimism as President Trump’s tariffs could stir up a new storm for employers.
“Recent global events have put pressure on any growth prospects in the UK, so it is unlikely that we will see an improvement in the data in the near term.”