10 Aug 2023
by APSCo United Kingdom

Navigating contrasting trends: A new APSCo report looks at London's labour market in 2023

The London economy in 2023 is facing its fair share of challenges and opportunities. After experiencing a decline in household income in 2022, the city is projected to witness a slight recovery with growth over the next couple of years. 

However, one area that has been notably affected is the labour market. Job vacancies in London have seen a significant drop, raising concerns about the potential impact on the overall economy. 

In this article, we provide an insight into our recent research into labour market trends in London, and shed light on the reasons behind the decline in vacancies and its implications on various industries. We'll also explore how we believe policymakers can encourage economic growth and address the skills gap to bolster the city's job market.

APSCo members can download a copy of the London Regional Labour Market Trends report here, and non-members are invited to request a sample copy by completing the form below

London job vacancy trends and industry impact According to our research, the first half of 2023 saw a noticeable slowdown in London's job market, with vacancies across industries dropping substantially compared to the previous quarter. This is reflected across England. According to Bloomberg, jobs listed with Reed Recruitment are down almost 25% in the three months to June from a year earlier, and are almost 27% lower than the same time in 2019.

In London, the technology, media, and telecoms industry experienced the biggest fall, and is projected to decrease even further in this full year. Real estate, another crucial sector for London, has also suffered drops in vacancies. However, the public sector and non-profit sector have managed to maintain growth.

The slowdown in the job market was somewhat expected, considering the recruitment boom we saw in 2022. Nonetheless, the challenge for policymakers is to prevent this slowdown from turning into a recession. The current state of the economy remains sluggish, with high inflation and the rise in the cost of living, and policymakers must find effective ways to boost hiring and attract highly skilled talent to the city.

What are the factors influencing the decreasing number of vacancies? Several factors have contributed to the decline in vacancies across London. Firstly, the impact of quantitative tightening on the British economy has particularly hit the real estate sector. As evident from HSBC's downgrade of share prices for property companies, including those in London, the property market is experiencing a substantial downturn.

Rising inflation in the UK has also affected the job market. Some experts suggest that a recession may be the only way to control inflation. This stance is reflected in the trajectory of interest rate increases. As interest rates rise, we observe a corresponding drop in vacancies across industries and job functions.

London’s most in-demand skills IT remains the most sought-after skill in the London job market, despite a considerable decline of almost half in IT vacancies year-on-year. Marketing, which held the second-largest share of vacancies in 2022, is also projected to experience a large negative year-on-year change. Accounting and finance, on the other hand, has shown more resilience, although there has been a definite dip in vacancies compared to last year.

But it’s the technology, media, and telecoms (TMT) industry, which dominated the job market in 2022, that’s facing the most substantial fall in vacancies. Why? According to Deloitte, it could be because of macroeconomic uncertainties. Almost 75% of Deloitte-surveyed technology industry leaders said that their company was taking actions to prepare for an economic downturn, and this included a slowdown in recruitment. We’ve also seen the likes of Amazon experiencing a sharp decline in vacancies, indicating potential changes in their hiring strategies. 

While other sectors, like financial services and real estate, are showing smaller decreases in vacancies in 2023, it’s notable that the public and non-profit sector continues to grow, projecting an almost 35% increase in vacancies in 2023.

A final thought As London navigates contrasting trends in its job market in 2023, policymakers must prioritise economic growth and address the skills gap to ensure a successful year. While certain industries and companies are experiencing declines in vacancies, others are expected to continue growing. 

Policymakers should create an enabling environment for firms to hire staff, foster innovation, and attract highly skilled talent to support London's economy in the long term. With careful planning and strategic measures, London can overcome its current challenges and emerge stronger in the years to come.

Want to read the full report? Members can access the London Regional Labour Market Trends report hereIf you’re not yet an APSCo member, complete the form below to request your sample copy of the report delivered directly to your inbox.