The latest KPMG and REC, UK Report on Jobs survey, compiled by IHS Markit, signalled a further marked improvement in labour market conditions in April, with hiring activity rising sharply for both permanent and temporary staff. Recruitment was bolstered by stronger market confidence as the UK began to emerge from the third national lockdown and more parts of the economy reopened. Furthermore, overall vacancies expanded at the quickest rate for 23 years.
The latest survey also highlighted a marked drop in candidate availability, however, as many people were reluctant to seek new roles amid concerns over job security. The reduced supply of workers drove further notable increases in starting salaries and temp pay.
The report is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies. The easing of national lockdown measures and brighter outlook for the economy led to a further marked increase in recruitment activity at the start of the second quarter. Permanent placements expanded at the sharpest rate since October 1997, when the survey first began, while temp billings growth remained historically strong. The upturn in demand for staff gathered pace in April, with overall vacancies increasing at the quickest rate for 23 years. Permanent vacancy growth outpaced that seen for temporary roles, with the former rising at the quickest rate since March 1998 and the latter to the greatest extent since October 2014.
After broadly stabilising in March, the availability of candidates fell in April, and at the sharpest rate since January 2020. Reduced candidate supply was often linked to ongoing pandemic-related uncertainty preventing people from seeking new roles. There were also mentions that Brexit, IR35 legislation and furlough had reduced the pool of available candidates.
Skill shortages and improved demand for staff led to further increases in starting pay for both permanent and temporary staff. Starting salary inflation hit a 14-month high, while temp pay growth improved to its best for a year-and-a-half.
Permanent staff appointments expanded at historically sharp rates across all four monitored English regions, with the Midlands recording the steepest increase overall.
Substantial growth in temp billings was seen across all four monitored English areas bar London, where a mild expansion was noted.
Demand for staff continued to rise at a particularly sharp pace in the private sector during April, with permanent vacancies registering a more marked increase than that for temporary roles. Nonetheless, public sector demand for staff rose at a stronger pace compared to March, with temporary vacancies showing a faster rise than permanent roles.
IT & Computing saw the steepest increase in permanent staff vacancies in April, followed by Accounting/Financial and Engineering. Retail was the only sector to register lower demand for permanent staff, though the decline was only modest.
All of the ten monitored job categories recorded higher demand for temporary staff in April except for Retail, which noted a marginal reduction. Blue Collar and Construction registered the strongest rises in demand for short-term workers.
“There’s a lot to feel positive about this month, with the easing of lockdown improving business confidence in the economy and in turn driving a sharp rise in recruitment,” said Claire Warnes, partner and head of education, skills and productivity at KPMG UK. “However, it’s concerning that we’re seeing a drop in candidate supply due in part to applicants needing support to adapt their skills to move from displaced sectors to those where there is more demand, such as health and care, and because the furlough scheme has reduced the pool of workers.”
Reacting to the data, Neil Carberry, Chief Executive of the REC, added: “The jobs market is improving at one of the fastest rates we have ever seen, and that’s great news. We are bouncing back from a record low – and many people are still struggling – but the data shows that job creation is firing up again. This month’s numbers for permanent hiring are the best we’ve seen since the survey started in 1997. Temporary hiring has chalked up its ninth straight month of growth, demonstrating again how important temporary agency work is to getting families and businesses back on their feet.”