News & views
2024 UK Jobs & Hiring Trends Report: The Opportunities and Challenges AheadDate Posted: 17 January, 2024
In the UK, the labour market has shown resilience, standing firm in the face of a challenging economic climate. The market, which historically boasted tight conditions, is gradually showing signs of easing, with a delicate balance between labour demand and supply.
The report underscores the ongoing dynamics, shedding light on several key observations:
The equilibrium in labour dynamics continues, with candidates maintaining a degree of influence over pay and conditions. Flexibility emerges as a potent tool for both attracting and retaining talent, even as the era of high wage growth reaches its zenith. Notably, foreign interest in UK jobs has surged over the past two years, a trend paralleled by the transformative impact of Generative Artificial Intelligence (GenAI) on job creation and disruption.
As we reflect on the past, the UK labour market, once red-hot in 2022, has gradually cooled throughout 2023. This trend is anticipated to persist into 2024, mirroring the challenging economic outlook and the ongoing battle against inflation.
The delicate balance between labour demand and supply continues to shift, with vacancies receding from their peak, and labour participation recovering post-pandemic. Despite this, the labour market remains relatively tight by historical standards, likely to loosen only gradually.
The implications of this gradual loosening are noteworthy. Hiring conditions are expected to pose challenges, particularly in lower-paid sectors grappling with persistent staff shortages. This shift also implies that candidates will retain a certain level of influence regarding pay and conditions.
Amidst the grim economic landscape, the demand for workers is anticipated to soften further. Economic indicators point towards a struggling UK economy, with inflation being a significant concern. Projections from the Bank of England (BoE) and the Office for Budgetary Responsibility (OBR) foresee minimal growth, while unemployment is expected to rise modestly by 2025.
Employer hiring appetite has slightly waned, yet it remains stronger than pre-pandemic levels. The Indeed Job Postings Index, as of 24 November, is down 28% from its peak in December 2022 but still 9% above the pre-pandemic baseline of 1 February 2020.
Job postings on Indeed reveal a decline, especially in sectors reliant on consumer discretionary spending. However, despite intentions to hire additional workers being tempered, employers exhibit a reluctance to shed existing staff, possibly influenced by the challenges faced in recent years.
The uncertainty in the labour market is mirrored by the sentiments of jobseekers. Approximately 43% of actively searching respondents in September expressed confidence in finding a new job within the next month
While concerns persist about the accuracy of labour market data, immigration is seen as a factor supporting an increase in labour supply. Foreign interest in UK jobs has rebounded strongly, with more than 1-in-20 UK job searches originating from jobseekers abroad.
Wage growth, a pivotal factor influencing interest rates, has likely peaked but is expected to remain stubborn. The Bank of England anticipates private sector wage growth to ease during 2024 amid a looser labour market.
Despite these challenges, the lowest-paid workers can expect a significant wage uplift, following announcements of record increases in the statutory minimum wage.
The focus on flexibility in the post-pandemic job market is evident. Remote and hybrid work terms, though slightly declining, remain over three times higher than pre-pandemic levels. Jobseeker interest in remote and hybrid work is high, emphasising the importance of location flexibility as a retention tool.
The report also highlights the increasing influence of Generative Artificial Intelligence (GenAI) on the labour market. While some jobs face potential exposure to GenAI-driven change, others related to the creation and use of GenAI tools are witnessing surges in demand.
As it stands, while the UK economy enters 2024 facing economic headwinds, the labour market stands out as a beacon of resilience. The delicate balance in labour dynamics persists, offering a potential path to a soft landing. However, vigilance is essential as potential setbacks could impact the economy. The labour market’s robustness becomes a focal point as we head into a general election year, where economic fortunes will be under intense scrutiny. Navigating the evolving dynamics of the labour market will be crucial for businesses and job seekers alike in the coming year.