A loosening of COVID-19 restrictions and improved optimism in the economic outlook. These two factors have been cited as reasons why many businesses stepped up their job recruitment plans last month. This in turn has led to record job hiring activity figures being recorded. In the latest report from KPMG and the REC, it was found that both permanent placements and temporary hirings for jobs both rose sharply during August. Whilst in contrast, candidate availability declined sharply, leading to greater competition. This also generated mounting pressure on firms to offer higher rates of pay for jobs in both the permanent and temporary sectors.
Neil Carberry, Chief Executive of the REC, commenting on the findings said;
“In August, the number of staff available to start jobs fell at another new record rate, deepening the current labour shortage. Recruiters are now working around the clock, placing more people into work than ever as these figures show. Switching the entire economy on over the summer has created a unique demand spike, and a short-term crisis.”
The report which combines data from around 400 UK recruitment and employment consultancies, noted the following key findings:
Permanent Placement Growth Hits Record High
With more businesses having opened up over the summer months, and people no longer being placed under COVID-19 restrictions, the economy has created the demand for further job hire activity. The latest market findings saw permanent placements rising at a survey-record breaking rate, along with temp job billings also showing significant increases.
Increased vacancies during the month of August further underpins the positive outlook signalled in July where figures exceeded all-time record results, showcasing that the demand for both permanent and temporary roles remains strong.
Unprecedented Fall in Candidate Supply Drives Pay Increases
Whilst vacancies have increased sharply, the report detailed that in contrast to this, candidate supply decreased significantly. Fewer EU workers, furloughed staff and a skills shortage were among the reasons cited for this decrease. Many businesses have had to adapt their business models because of the pandemic. A reluctance among employees to switch or retrain has also impacted the labour supply market.
Commenting on their latest report, Claire Warnes, KPMG, commented:
“This crisis isn’t going away, and the winding down of the furlough scheme at the end of September – while potentially bringing more job hunters to the market – could also add fuel to the labour shortage fire. Many businesses have changed their business model during the pandemic. Hence, significant numbers of staff returning from furlough may need reskilling to rejoin the workforce in the same or another sector.”
Naturally increased competition for staff amid a shrinking labour market has put added pressure onto starting pay. Salaries for newly-placed permanent staff having increased at the fastest rate seen in nearly 24 years of data collection. Temporary staff wage inflation was also reported as the second-quickest on record.
Regional and Sector Variations
All four English regions monitored in the survey reported increases in permanent placements in this latest reporting period. London led the way with record growth numbers. The North and South of England also reported unprecedented upturns, with the North just slightly lower than the previous month.
The private sector recorded stronger growth in vacancies than the public sector. IT/Computing came out on top, closely followed by Hotel & Catering as more businesses continued to reopen. Unsurprisingly, retail saw the lowest figures, though these were still a vast increase on the previous months.
Within the temporary staff/contract staff placements during August, Hotel & Catering came out on top. Despite a sharp rise in all monitored sectors, the Construction sector showed the slowest signs of recovery.
Both KPMG and the REC believe that businesses need to address the labour shortage issue. Businesses working together with recruiters, government departments and civic leaders can collaborate to tackle worker and skills shortages. As business struggle to fill skills gaps, the recent adoption of flexible working by many businesses could result in a wider use of highly skilled contractors among a greater range of contract types. With a record number of placements available, it definitely remains a job seekers market.
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