News Article

UK - Recruitment activity continues to rise amid sharp drop in candidate supply

Posted 14th February 2022 • Written by •

The easing of Covid-19 pandemic restrictions, improved market confidence and strong demand for workers drove a further steep increase in recruitment activity across the UK during January, according to the latest KPMG and Recruitment and Employment Confederation’s UK Report on Jobs survey.

The report found that permanent placement growth remained sharp, despite easing to a three-month low, while temp billings expanded at the quickest rate since last August.

The steepest increase in permanent staff appointments was seen in the South of England, though rates of expansion softened across all four monitored English regions. All four monitored English regions saw sharper increases in temp billings in January, bar London. The quickest rate of growth was seen in the North of England.

Despite the continued growth in hiring, the rate of decline in overall candidate availability quickened for the first time in five months in January. Though not as steep as those seen during last summer, the rate of deterioration remained substantial overall. The downturn was driven by a quicker drop in permanent staff supply, as temp candidate numbers fell at a softer pace.

The robust demand for staff combined with candidate scarcity drove up rates of starting pay for both permanent and temporary staff at the start of the year. Starting salaries rose at the third-sharpest rate on record (since October 1997), beaten only by those seen last October and November. Temp wage inflation also remained rapid, despite the pace of increase easing to a seven-month low.

Meanwhile, job vacancy growth eased, but remains historically sharp. Demand for staff continued to rise at a historically sharp pace in January, despite growth of overall vacancies edging down to a nine-month low. Underlying data showed that the softer upturn was due to a weaker rise in permanent staff demand, as short-term vacancies expanded at a quicker rate.

Demand for staff continued to rise sharply across both the private and public sector during January. The quickest increase in vacancies was signalled for permanent roles in the private sector, while the softest was seen for temporary workers in the public sector.

Demand for permanent workers rose across all ten monitored job sectors at the start of 2022. The quickest increase in demand was seen for IT & Computing, followed by Nursing/Medical/Care. The slowest upturn in vacancies was seen in the Retail sector.

The increase in demand for temporary staff was also broad-based across all ten monitored sectors in January. The quickest expansions were seen in the Nursing/Medical/Care, Blue Collar and Hotel/Catering categories.

Neil Carberry, Chief Executive of the REC, said, "The jobs market is still growing strongly at the start of 2022. Recruiters are working hard to place people into work as demand from employers continues to rise. With competition for staff still hot, companies are having to raise pay rates for new starters to attract the best people. And the cost of living crisis means there is also more pressure from jobseekers who want a pay rise. But pay is not the only important factor - companies must think about all aspects of their offer to candidates to ensure they get the staff they need. This will be important as firms’ spending is under pressure from inflation as well.”

"Government's role is to manage inflation, but also to ensure that they do not discourage investment - that is what will drive the economy to grow through this year,” Carberry continued. “Now is the wrong time to be raising National Insurance, the biggest business tax. But politicians should also be thinking about longer-term workforce planning, making sure we have the skills the country needs for the future. This will take a collaborative effort between the public and private sectors, and the recruitment industry stands ready to help."

Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said, “The new year has seen the jobs market continuing where it left off, with a steep climb in permanent and temporary hiring. Meanwhile, a sustained decline in the number of suitable candidates has pushed starting salaries up for yet another month.

“Some sectors are continuing to show the strain of high demand for permanent and temporary roles,” Warnes added. “In particular, the IT and Computing, and Nursing, Healthcare and Medical sectors saw the greatest vacancy increases for yet another month, reflecting the significant workforce and skills challenges which these sectors have faced, and which the pandemic has accelerated.”

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