Following the publication of the KPMG and REC, UK Report on Jobs for May 2025, Paul Sharpe, Founder of NorthStar People, shares a summary of key points and what they mean for the recruitment industry.
Key Findings for May 2025 UK Labour Market
Permanent Placements
There was a sharp drop in permanent placements across the UK for the thirty-second consecutive month, with the rate of contraction slightly quicker than in April. The South of England saw the sharpest reduction, while the Midlands experienced its first increase in permanent placements in a year.
Temporary Billings
The decline in temporary billings softened in May, marking the fourth straight month of easing reduction and the slowest decline in six months. The Midlands recorded an expansion in temp billings for the first time in four months, and the downturn eased in London and the North of England.
Candidate Supply
Candidate availability expanded at the sharpest rate since December 2020 for both permanent and temporary staff. This increase is largely attributed to redundancies and fewer job opportunities.
Demand for Staff (Vacancies)
The overall decline in demand for staff eased, reaching the weakest rate since last September. Vacancies have fallen for 19 consecutive months, but the rate of contraction for both permanent and temporary roles was the slowest in eight months. Public and private sectors both saw a fall in vacancies, with private sector vacancies falling relatively modestly.
Pay Growth
Starting salaries for new permanent joiners strengthened, reaching a nine-month high, driven by competition for skilled candidates. Temporary wage growth also improved to a one-year high. However, both remained below their long-run averages.
Skills in Short Supply (Permanent)
Key areas with shortages include Accounting & Financial (e.g. Accountants, Payroll), Blue Collar (e.g. Drivers, Welders), Construction (e.g. Quantity Surveyors, Civil & Structural Engineers), Engineering (e.g. Design Engineers, Software Engineers), IT & Computing (e.g. Cyber Security, Data Scientists), Nursing, Medical & Care (e.g. Nurses, Doctors), and Executive & Professional (e.g. Project Managers, Solicitors).
Skills in Short Supply (Temporary)
Shortages are noted in Accounting & Financial, Blue Collar (Drivers, Forklift Drivers), Executive & Professional (Human Resources, Procurement), Hotel & Catering (Chefs), IT & Computing (Developers, IT Support), and Nursing, Medical & Care (Carers, Nurses).
According to Indeed
The UK labour market continues to soften as hiring appetite weakens. It’s one characterised by widespread caution, with the dampening impact of April’s rise in employer costs reinforced by global headwinds and uncertainty over the government’s Workers’ Rights Bill. Sharper-than-expected falls in wage growth and payrolled employment suggest a more material pace of labour market cooling may be starting to emerge, which could help open the door to a faster pace of interest rate cuts from the Bank of England. The labour market hasn’t collapsed, though, and the fact that redundancy notifications remain low offers some reassurance that we’re not about to see a sudden spike in job losses.
What are North Star People seeing?
- We continue to see positive signs with agencies reporting numbers close to last year
- We are seeing costs rise…LinkedIn have recently written to a number of agencies that we work with
- On average, agencies are spending 4% of their GP on LinkedIn
- The average recruiter is only filling 30% of all jobs….this means there is 70% of opportunity out there being missed
- According to James Gage, recruiters are spending 10% of training on account management and 90% on business development….is this the wrong way round?
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