The latest KPMG and REC, UK Report on Jobs has shown UK recruiters signalled a further sharp increase in hiring activity midway through the fourth quarter. According to the survey, permanent placement growth quickening since October and temp billings continuing to rise strongly.
The upturns were supported by further marked increases in vacancies for both permanent and short-term staff, albeit with growth rates softening from October. At the same time, there was a slower, but still substantial, drop in overall candidate supply. A notable imbalance between the supply and demand for workers led to further increases in starting pay. Notably, the rate of starting salary inflation hit a fresh series record in November.
The report is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.
Robust demand for workers and efforts to fill vacancies drove a further strong increase in hiring activity during November. Permanent placements rose at a sharper rate than in October, the fifth-quickest on record, and one that continued to outpace that seen for temp billings. Demand for staff continued to rise rapidly across the UK in November. This was despite the rate of expansion slipping to a six-month low. Underlying data indicated that both permanent and temporary vacancies increased at slightly softer rates compared to October.
Soft decline in supply since May
Latest data indicated that the downturn in candidate availability eased to its weakest since May during November. Nonetheless, the rate of decline remained substantial and among the quickest since data collection began in late 1997. Slower, but still rapid, falls were signalled for both permanent and temporary candidates, with recruiters often linking this to continued uncertainty around the pandemic, greater demand for staff and Brexit.
Low candidate numbers and efforts to attract and secure workers drove further steep increases in pay for both permanent joiners and temporary staff in November. Furthermore, the rate of starting salary inflation accelerated to a fresh series high, while temp pay softened only slightly from October’s all-time record.
Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said:
“The confidence of businesses to hire remains reassuringly robust. We’ve seen nine months of growth in permanent placements and rising vacancies for the past 10 months as the economy bounces back. The data points to a strong end to the year, but that hunger to expand could be tested as the jobs market becomes ever tighter. The pace of demand for workers is running far faster than supply can keep up with, which is draining an already diminished pool of available talent and feeding into inflationary pressures.
“The current trajectory is unsustainable in the long run for businesses and the wider economic recovery. The priority must be to replenish the workforce and ensure businesses can access the talent they need. That means equipping job seekers with the skills that employers and new industries are looking for, increasing labour market flexibility and improving transport links.
“In the meantime, businesses need to have one eye on cost pressures and the other on attracting and retaining talent – no easy feat given the intense jobs market. Many will be looking to the new year – a traditional time for job seekers to begin searching for new opportunities – to fill gaps in resource.”
“Today’s figures emphasise again how far we have come this year – it is certainly a great Christmas if you’re looking for a job,” added Neil Carberry, CEO of the REC. “This is always the busiest part of the year for recruiters, but demand for new staff across the autumn has been exceptional. Because of this high demand, starting salaries and temp rates continue to rise, making it even more attractive to be looking for a new opportunity in 2022. Hiring companies will need to make sure they get their offer right – not just on pay – and take an inclusive approach if they are to avoid losing out.
“It’s too early to tell what the effect of the Omicron variant might be on the labour market,” Carberry added. “December may be slower than previous months as its effects feed through. Hospitality will be in the forefront of any changes as we approach the festive season, of course, and the impact of high inflation will also be felt as purses tighten in January. But the broader outlook is more positive for candidates, suggesting that the labour market will remain tight for some time to come. This will put a premium on skills development, and the flexibility to hire overseas when necessary. These two issues will be critical ones for the government to address next year – both levelling up and delivering a global Britain rely on them.”
