’s 2023 Labour Market Review

It’s fair to say that 2023 has been another year of ups and downs. The UK jobs market has seen new trends and patterns emerging this year that are vastly different from those of recent years. 

It’s not a surprise to see that the ongoing risk of a potential recession, the unpredictability of inflation and interest rates, and widespread redundancies have affected the jobs market. Interestingly, at the start of 2023, 63% of recruiters believed that we would see a continuation of the candidate-led market*, however, as the year has gone on it seems as though the 20% that predicted a shift to an employer-led market were correct. 

Applications were up consistently throughout2023

Despite the previously mentioned economic challenges, applications were up consistently in 2023, with a 29% increase compared to 2022**. 

Undoubtedly, redundancies have somewhat contributed to the increase in applications given that more working professionals have found themselves looking for a new role. Another factor contributing to the jump in applications is pay growth. With recent news of pay growth rising above inflation for the first time in nearly two years, many workers will now be seeking new positions with higher salaries. 

Almost every sector saw an increase in applications in 2023 compared to 2022**. The most notable increases were seen in the General Insurance (64%), Leisure & Tourism (61%), and IT & Telecoms (60%) sectors. The only sectors that experienced a dip in applications were Customer Service (2%), and Training (26%). 

Vacancies dropped due to economic challenges 

While applications may be up, the same can’t be said for job postings. data shows an 18% decrease in the number of jobs posted on the site in 2023 compared to 2022***. This dip in job postings shows that employers have slowed down their hiring this year, likely in response to the tricky economic conditions we’ve endured. 

The sectors that saw the most prominent drops in job postings this year were Hospitality & Catering (42%), Media, Digital & Creative (41%), and Manufacturing (35%)***. 

With that said certain industries have prospered in this market and prioritised growth. Vacancies in the Motoring & Automotive (23%), Energy (20%), and Education (19%) sectors all saw positive Year-on-Year growth***, with the top roles for each sector confirmed as Technician, Engineer, and Teacher, respectively. 

2023 salary trends

Pay has just about managed to keep up with the rising rate of inflation in 2023 – which peaked at 10.4% in February, and has since fallen to 3.9% in November. As inflation eased, the pace of salary growth eased too, dropping to 6.2% in November from a peak of 7.7% in March, according to salary data. The fact that pay has now overtaken inflation means that we should hopefully start to see the pinch of the cost of living crisis ease. 

The Hospitality & Catering, and Retail sectors showed the most significant YoY salary growth, increasing by 22% and 16% respectively, whereas the Financial Services sector saw a 2% salary shrinkage****.

What’s next?

In 2023 we saw the market shift from a candidate-led market to an employer-led market as businesses looked to cut back and proceeded cautiously in the face of economic uncertainty. And we don’t expect that to change too much in the early months of 2024. 

In 2024 the economy is predicted to see a continued slowing of the inflation rate and modest economic growth. It’s set to be a positive year for recruiters who should look to capitalise on the abundance of talent available as well as the government initiatives to boost labour market participation, such as the extension to free childcare. We don’t predict another major turn in the labour market and these are certainly all optimistic signs for the UK economy. 

James Reed, Chairman and CEO of the Reed Group, commented: 

“As we reflect on the year drawing to a close, our 2023 labour market review signals a noteworthy shift from a candidate-led to an employer-led market. Primarily, this shift is a reflection of the challenging economic conditions experienced in 2023.

“Still, while many sectors faced declines in job postings, there were some notable exceptions, and this highlights the adaptability and resilience within certain industries despite the overall market challenges.

“Looking ahead to 2024, we anticipate this trend of an employer-led market to persist, with a sustained focus on strategic hiring decisions and talent acquisition. A rise in applications across the board is indicative of the richness of talent available to employers, making it a good time for them to take advantage of this and bolster their workforce. 

“Based on current economic forecasts, we don’t foresee another major turn in the labour market. Although, the Bank of England’s anticipation of slowing inflation provides a positive outlook for wages. 

“The past three years have deviated from the norm and the pendulum swing we’re experiencing is part of the market’s response to these seismic changes – but employers and jobseekers alike have reason to maintain a sense of confidence as we head into next year.”

*This online survey was conducted by Atomik Research and consisted of 251 UK hiring managers. This survey took place between 6 – 9 February 2023. Atomik Research is an independent creative market research agency that employs MRS-certified researchers and abides by the MRS code

**The number of applications on between 1 January 2022 – 19 December 2022 and 1 January 2023 – 19 December 2023

***The number of jobs posted on between 1 January 2022 – 19 December 2022 and 1 January 2023 – 19 December 2023

****Average salary growth on between 1 – 31 November 2022 vs 1 – 31 November 2022