Magnit’s Winter 2023 Europe Labour Market Report has detected key market trends that are creating a volatile landscape and driving organisations to adopt a cautionary approach.

The Integrated Workforce Management (IWM) Platform provider’s report highlights the diverse challenges facing the European labour market due to rising interest rates, the energy crisis, global supply chain shortages, record inflation and the continuation of the war in Ukraine. It also details how negotiating this tumultuous landscape is further complicated by an unusual mix of positive and negative data trends.

Throughout Europe, employment is close to its highest ever levels. The UK, Sweden, Germany and Poland are all at or near to their lowest unemployment rates ever. However, early warning signs from the Benelux region may suggest the trend is reversing. Belgium has seen an 11 per cent increase in unemployment since February 2022 and the Netherlands has seen a 16 per cent increase since April. Vacancies are up significantly year-over-year, however data from the last two quarters suggests that this growth is slowing in some countries, most notably the UK. In the UK, initial average increases in vacancies of 34 per cent between Q2 2021 and Q3 2021 have fallen to more modest increases of four per cent and one per cent in the last two quarters. This suggests that the UK vacancy market has reached an apex and could see further declines in the short-term.

Economic uncertainty is resulting in salaries falling across the professional labour market. However, organisations risk being on the back foot once the recovery begins if they don’t invest in talent now. That’s according to the latest data from the Association of Professional Sta ing Companies (APSCo) – the trade body for the professional recruitment sector.

The data revealed an expected seasonal decline in hiring towards the end of last year. Permanent jobs dropped 15 per cent and contract vacancies fell 22 per cent between December 2021 and December 2022.

Although this decline is to be expected, it is the fall in remuneration which paints a more concerning picture at a time when skills shortages are rife. According to APSCo’s data, average permanent salaries also fell in December 2022, down six per cent when compared to the same period in 2021.

While a drop in salaries is indicative of the economic uncertainty the country has faced, with sta across the UK facing a cost of living crisis this fall will be cause for concern for households. According to APSCo, businesses need to look at wider remuneration packages to attract and retain the highly skilled resources they need both now, and once the UK economy recovers.