• Cost concerns and redundancies reported at UK companies
• Pay continues to rise for high quality candidates
• Staff availability increases to the greatest degree in six months

Commenting on the latest survey results, Jon Holt, Group Chief Executive and UK Senior Partner KPMG, said: “As we start the new year, it’s a muted one for the UK jobs market. December’s data shows weakening demand causing the biggest contraction in vacancies since August 2020, coupled with hiring intention declining at a pace not seen for 16 months. “The hiring market could continue to show signs of caution in the short-term, as businesses pause to take stock of higher employment costs, a more gradual pace of interest rate cuts and rising inflation. “However as 2025 progresses and UK economic growth picks up, businesses will need new talent. Salary inflation being at its steepest in four months shows they are still willing to compete for it. “Chief Execs will certainly also be counting on new policies which support their 2025 growth ambitions and boost confidence to invest.”

Commenting, Neil Carberry, REC Chief Executive, said: “This report emphasises a weak mood in some businesses as they built their budgets for this year, and made changes designed to save on costs after a tough Budget. That said, sentiment can change quickly. December is always a hiring low point, and a new year brings new hope – with inflation under control, low unemployment and economic growth expected, the fundamentals are better than many appreciate. It is what happens now, as firms return to the market in January, that will decide the path ahead. Recruitment is one to watch in early 2025 because it is one of the earliest indicators of a broader economic recovery, with any sign of a turn hugely significant with the sector contributing a massive £44.4bn to the UK economy in 2023.”

Our key takeaways from the December report

Tech sector decline – Latest data showed that permanent staff vacancies were down across all sub-sectors for the second month running in December. The steepest rate of contraction was seen for Executive/Professional followed by IT/Computing

Accelerated fall in permanent placements in December – The end of 2024 saw the fastest decline in permanent placements since August 2023, according to the latest KPMG/REC Report on Jobs survey. Respondents noted a lack of market demand for candidates amid evidence of a growing cost consciousness amongst firms Temp billings similarly declined in December, and to a greater extent than typically seen during 2024.

Upturn in permanent salary pay recorded in December – Despite a drop in permanent placements, there was an acceleration in the rate of starting salary inflation during December as firms remained willing to raise pay for high quality staff (and in some instances as part of talent retention programmes). Overall, the increase in perm salaries was the best in four months, although inflation remained well below trend. Similarly, temp pay rates rose modestly in December amid reports that a high supply of candidates was limiting pay inflation.

Vacancies continue to contract sharply in December – Vacancy numbers declined again, with the rate of contraction picking up since November to the steepest recorded in well over four years. Permanent staff saw the biggest drop in demand since August 2020. Although not as severe as perm workers, the decline for temp staff was the greatest in four-and-a-half years.

Staff availability rises at an accelerated pace – Recruitment consultants reported another steep increase in staff availability during December. Overall, the expansion in availability was the sharpest since June. The upturn in growth was primarily driven by the permanent staff category, although temp worker availability also rose sharply at the end of 2024.

Enigma People Solutions is an award-winning technology recruitment consultancy. We find technical leaders for the emerging and enabling technology industries. Visit our services page for more information. Visit our job search page for the latest vacancies in photonics, electronics, semiconductor, software and IoT in Scotland and the UK. Check out our blog page for the latest in the technology industry. You can get in touch with us hello@enigmapeople.com or call us on + 44 131 510 8150