Perm and Temp Rise

Demand growth leads to higher starting salaries.

Perm and Temp Rise

UK & Europe

The IHS Markit/REC Report on Jobs has shown steep increases in both permanent placements and temp billings. The research suggests severe staff shortages are leading to the quickest rise in starting salaries for three years.

Permanent staff appointments continued to rise at a robust pace, despite growth softening to a five-month low. Conversely, temp billings expanded at the quickest rate in 2018 so far.

Growth of demand for staff strengthened to a six-month high in May, with sharp increases in both permanent and temporary roles signalled by the latest data. Overall, candidate availability declined at a sharper rate midway through the second quarter. Permanent candidate numbers fell at the fastest rate for four months, while short-term staff availability deteriorated at the quickest pace since last November.

Perhaps unsurprisingly, these factors – strong demand for staff and low candidate availability – have led to further increases in starting salaries and temp pay. Notably, salaries awarded to successfully placed permanent workers rose at the steepest rate for three years.

Of the five monitored UK regions for which data are available, the sharpest increase was registered in Scotland, closely followed by the Midlands. The weakest expansion was noted in London. As was the case for permanent placements, Scotland led the way in terms of temp billings growth on a regional basis. Nonetheless, sharp increases were also recorded in the Midlands, London and the South of England, while the North of England noted the least marked rate of expansion. 

May data continued to show that demand for private sector staff continued to increase at a steeper rate than that for public sector workers. Although growth of demand for both permanent and temporary staff in the private sector edged down slightly since April, it remained marked overall. Across the public sector, permanent vacancies rose at a faster rate compared to April, while short-term roles increased to the weakest extent for four months.

Engineering was the best performing sector in the demand for permanent staff league table during May. Nonetheless, vacancies also expanded sharply across all other monitored categories, with the exception of Retail, which registered a further decline. Demand for temporary staff rose across all of the ten monitored job categories, led by Blue Collar and Engineering. The weakest increase in job vacancies was noted in Retail.

“Despite growth in demand for staff this month, we have seen another severe drop in staff availability,” said REC director of policy Tom Hadley. “Whilst it is encouraging to see a rise in staff appointments for permanent and temporary staff, indicating that employers are feeling confident in making hiring decisions, a lack of candidates remains a major challenge for recruiters - particularly in areas like nursing, engineering, manufacturing and IT. Staff shortages are becoming business critical in many of these key sectors.

 “Because of the lack of candidate availability we are seeing employers paying higher salaries to attract the right people,” he continued. “This is only part of the solution, with employers also having to think about providing a more flexible working environment and progression opportunities. With skills needs and candidate expectations continuing to evolve, employers are having to radically re-imagine their hiring procedures. Government can help by ramping up the UK skills base and ensuring a balanced and evidence-based immigration system.”



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