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Strong permanent placements but candidate shortages fuel rising salaries, REC & KPMG report reveals

The report provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies. 

Marked growth of staff appointments&hellip

Permanent staff placements rose at a strong and accelerated rate in April, although the rate of expansion remained below February’s recent peak. Temp billings also rose at a robust pace, albeit the lowest since June 2013.    

...as demand for staff remains strong

Underpinning higher staff appointments was a further increase in vacancy levels during April. The rate of growth in demand for staff was broadly unchanged from March’s elevated pace. 

Sharper reduction in candidate availability...

The availability of staff to fill positions declined at a faster rate in April. For permanent candidates, the latest fall was the sharpest since October 2004, while for temporary workers it was the steepest since December 2000.

...drives rising pay pressures

Growth of permanent salaries accelerated further in April. The latest increase was the most marked since July 2007. Temporary staff pay increased at a solid pace that was sharper than in the preceding month.

Regional and sector variation

The Midlands and the North posted the strongest increases in placements during the latest survey period, while the South saw the slowest growth.

Temp billings growth was strongest in the Midlands, while the North posted the slowest rise.

Demand for staff continued to rise at a particularly sharp pace in the private sector during April, with permanent employees registering a more marked increase than temporary workers. 

Public sector demand for staff continued to grow at a solid pace, with temporary vacancies showing a faster rise than permanent roles. 

Engineering remained the most in-demand category for permanent staff in April. Strong rates of expansion were signalled across the board, with Nursing/Medical/Care taking second place in the demand for staff & lsquo;league table’.

Mirroring the trend seen for permanent staff, Engineering was the most sought-after category for temporary/contract workers in the latest month, followed by Nursing/Medical/Care. All other staffing types saw strong rates of growth in job vacancies.

REC CEO Kevin Green said, “Recruiters continue to place more people in work as the jobs market accelerates. However the jobs market could be jeopardised with thousands of employers not able to find the skills and talent they need to meet increasing demand. The number of candidates available to fill both temporary and permanent jobs is falling at its fastest rate in a decade. In response to this employers are bumping up starting salaries to entice workers they need to join them.

“This dearth of skilled workers means that many organisations will need to improve their candidate experience and also look overseas to find people. The government must do more to support businesses by ensuring that the visa process does not act as a barrier to growth.” 

Bernard Brown, partner and head of business services at KPMG, commented, “With starting salaries rising at their fastest rate for almost seven years and temporary placements growth slowing down, people would be forgiven for thinking that the time is right to change jobs.  After all, for many months the focus has been around how long employees would wait before deciding it’s time to try something new.  Yet the truth is far different.  The number of people putting themselves on the jobs market has dropped at its sharpest rate since 2004.  It is this shortage of skilled labour that is forcing employers to tempt talent with improved pay, rather than new-found confidence.

“With employers focusing their attention on trying to win over talented people with proven skills and track records, there remains one unanswered question.  We have growing numbers of new entrants to the marketplace looking for work and employers will ignore them at their peril.  Not acknowledging what they have to offer continues the very real risk of losing a generation of talent – it makes no business sense, because without a blend of youth and experience the workplace will no longer reflect the marketplace.

“Of course, with the economy growing and the pound strengthening, we could potentially see this trend reversing in the near future.  As consumers begin to spend more in their personal lives, confidence is likely to return in a professional capacity.  When that happens, candidates are more likely to be looking for a new challenge, meaning that employers will have to focus equally on both retention and recruitment.”

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