As we move into the final quarter of 2024, the UK labour market shows signs of a trend. According to the latest REC UK Report on Jobs for August 2024, the once-surging demand for permanent and temporary placements has seen a noticeable softening. While hiring activity continues to grow, the job market dynamics are shifting, affecting salary growth, staff availability and recruitment practices.

Salary growth development:

Despite a drop in placements, salaries for permanent and temporary roles rose in August 2024. However, the rate of increase is notably weaker than in previous months, indicating that salary pressures are beginning to ease. For permanent staff, the salary increase was the slowest since March 2024.

The deceleration in wage growth comes as many organisations are balancing the need to attract quality candidates with the constraints of tighter budgets and economic pressures. Companies are still raising salaries to remain competitive, but the moderation in growth reflects the challenges of maintaining aggressive pay hikes in the easing labour market.

Growing staff availability:

August 2024 saw a continued rise in permanent and temporary staff availability, driven by redundancies and lower placement volumes from earlier in the year. The combination of economic certainty, cost-cutting measures, and slower hiring rates has resulted in more candidates entering the job market. This is a shift from the talent shortages experienced in previous years, providing employers with more leverage in salary negotiations as the competition for talent calms.

What does this mean for employers?

The labour market offers opportunities and challenges for businesses. The increase in candidate availability means employers may find it easier to fill open roles without raising salaries as aggressively as before. However, it’s still essential to remain competitive, particularly for critical roles where specialised skills are in high demand.

Employers must balance offering attractive compensation packages with a more measured approach to salary increases significantly as wage growth slows. Furthermore, businesses should focus on other aspects of recruitment and retention, such as flexible working arrangements, career development opportunities, and a positive work culture, to continue attracting top talent in this changing market.

Next steps:

The labour market conditions in the UK are evolving. While hiring activity has slowed and salary growth is rising, employers must stay agile to navigate these changes. For companies like RHL Recruitment, these insights are vital for informing recruitment strategies and helping businesses and candidates thrive in the current climate.

At RHL Recruitment, we’re here to help businesses navigate these complexities, offering insights and support to ensure successful placements in permanent and temporary roles.