Northern firms 'facing persistent shortage of candidates', KPMG boss warns

The latest KPMG and REC, UK Report on Jobs: North of England survey signalled another month of falling hiring activity midway through the final quarter of 2022.

Both permanent staff appointments and temp billings fell for a second successive month.

Recruitment agencies commented on falling client activity levels and candidate shortages.

The availability of staff for permanent positions fell sharply and to a considerably faster extent than seen across the UK as a whole, although temporary candidate numbers showed signs of stabilising.

Meanwhile, job vacancies continued to rise, although rates of growth remained well below those seen earlier in the year. Pay pressures remained elevated in November, although a softening of permanent starting salary inflation contrasted with a quicker uptick in temp wages.

The KPMG and REC, UK Report on Jobs: North of England is compiled by S&P Global from responses to questionnaires sent to around 150 recruitment and employment consultancies in the North of England.

Euan West, Office Senior Partner at KPMG in Leeds, said: “The gears of the Northern jobs market are crunching.

"Employers are posting vacancies, but the persistent shortage of candidates is depriving the economy of the much-needed oil to keep it turning.

"Without that availability of new talent, which has been compounded by workers staying put for job security, business growth plans and strategies to combat the incoming recession are likely to be hampered.

“However, the tail end of the year is notoriously difficult for recruitment and we are likely to see some movement in the new year when candidates have historically been tempted to look for new opportunities.

"The figures over the coming months will provide an important indication as to how deep an impact economic uncertainty is having on candidate and employer confidence in the North of England.”

November survey data showed permanent staff placements falling at a solid pace across the North of England.

This marked a second successive decline, with the rate of contraction only marginally slower than October's 21-month record.

Neil Carberry, Chief Executive of the REC, said: “This month’s data emphasises that while employers are moderately more cautious in the face of economic uncertainty, this is not yet a major slowdown in hiring.

"While permanent recruitment activity has dropped from the very high levels of earlier in the year, the pace of that drop has tempered this month.

“In contrast to the national trend, temporary hiring slowed in the North in the run-up to Christmas. Temporary vacancies however ramped up as businesses favour short-term workers in the current economic climate.

“As the economic outlook weakens, we can expect to see falls from historic highs across our measures, but it is notable that pay and vacancies are still growing, although at a much lower rate.

“A flatter period in the labour market is inevitable in this current economic climate, but demand is being supported by some major underlying factors, including labour shortages and technological change.”