KPMG AND REC, UK REPORT ON JOBS

Upturn in hiring activity slows again amid candidate shortages

Upturn in hiring activity slows again amid candidate shortages

Key findings

Permanent staff appointments rise at slowest rate for a year

Labour supply falls rapidly, driving record rise in starting salaries

Overall vacancy growth hits six-month high

Data collected March 11-25

Summary

The latest KPMG and REC, UK Report on Jobs survey highlighted softer rises in hiring activity during March, as candidate shortages restricted growth of both permanent placements and temp billings. Nonetheless, expansions remained sharp by historical standards, fuelled by a further steep increase in demand for staff. The availability of candidates to fill roles continued to fall sharply, however, with overall staff supply dropping at the quickest rate for four months.

The imbalance of labour supply and demand drove further substantial increases in rates of starting pay, with salaries for new permanent joiners rising at the quickest rate on record in March.

The report is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

March sees further slowdown in hiring activity

Latest survey data pointed to softer expansions in both permanent staff appointments and temp billings across the UK in March. Though elevated by historical standards, rates of increase fell to 12- and 11-month lows, respectively. Recruiters frequently mentioned that candidate shortages continued to weigh on their ability to fill vacancies. 

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Permanent Placements Index Temporary Billings

Permanent Placements Index Temporary Billings

50.0 = no-change

Steepest drop in total staff supply since last November

The overall availability of workers in the UK continued to fall rapidly at the end of the first quarter. Notably, the rate of contraction was the steepest seen for four months, with a slightly quicker drop in permanent candidate numbers offsetting a softer fall in temp labour supply. Panellists often mentioned that a generally low unemployment rate, uncertainty related to the pandemic and Ukraine war, fewer EU workers and robust demand for staff had limited worker availability.

Starting salary inflation hits new record

Recruitment consultancies signalled a further increase in permanent starting salaries in March. Moreover, the rate of inflation was the sharpest in 24-and-a-half years of data collection amid reports of intense competition for staff. Average wages for temp workers also rose in March, and at a rapid pace that was the quickest for three months. 

Demand for staff increases at fastest rate for six months

Overall vacancies rose for the fourteenth month in a row in March, and at the quickest rate since last September. Recruiters indicated stronger rises in both permanent and temporary staff demand in the latest survey period, with the former noting the steeper rate of growth.

Regional and Sector Variations

The Midlands registered the sharpest increase in permanent placements of all four monitored English regions. The softest, but still marked, expansion was seen in the South of England.

All four monitored English regions noted marked upturns in temp billings at the end of the first quarter, led by London.

Vacancies rose across both the private and public sector at the end of the first quarter. The strongest expansion in demand was signalled for permanent staff in the private sector, while the softest increase in vacancies was seen for permanent staff in the public sector.

As has been the case in each of the prior four months, IT & Computing recorded the steepest increase in demand for permanent staff of all ten monitored sectors in March. The softest, but still sharp, rise in permanent vacancies was seen in Retail.

March survey data also pointed to a broad-based increase in temporary staff demand, with Hotel & Catering topping the rankings. As was the case for permanent vacancies, the slowest increase in short-term roles was signalled for Retail.                                                    

Summary of data:

Comments

Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said:

“There’s no end in sight to the deep-seated workforce challenges facing the UK economy. Once again this month, job vacancies are increasing while there are simply not enough candidates in all sectors to fill them. With fewer EU workers, the ongoing effects of the pandemic, the economic impacts of the war in Ukraine and cost of living pressures, many employers will continue to struggle to hire the talent and access the skills they need. With unemployment staying low, there are many great opportunities for job-seekers to join or rejoin the workforce in all sectors.”

Neil Carberry, Chief Executive of the REC, said:

“We can clearly see that labour and skills shortages are driving inflation in these latest figures. Starting salaries for permanent staff are growing at a new record pace, partially due to demand for staff accelerating and partially as firms increase pay for all staff in the face of rising prices. Record COVID infection levels are also pushing up demand for temporary workers, particularly in blue collar and hospitality sectors, underpinning the ability of temps to seek higher rates.

“However, the overall number of placements being made is starting to stabilise. This is no surprise after a period of historically high growth, and in the face of more economic uncertainty. Even so, the jobs market is very tight. Businesses will need to broaden their searches and be creative in making their offer to candidates more attractive, in consultation with recruitment experts. But government can help by incentivising investment in skills and people during the inflation crisis.”

Contact

KPMG

Chris Mostyn

Deputy Head of Media Relations

T: +44 (0)7512 448000

chris.mostyn@kpmg.co.uk

 

 

REC

Josh Prentice

Comms Manager

T: +44 (0)20 7009 2129

josh.prentice@rec.uk.com

 

S&P Global 

Annabel Fiddes

Economics Associate Director

T: +44 (0)1491 461 010

annabel.fiddes@spglobal.com

 

 

Joanna Vickers

Corporate Communications

T: +44 207 260 2234

joanna.vickers@spglobal.com

 

Methodology

The KPMG and REC, UK Report on Jobs is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies. 

Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A diffusion index is calculated for each survey variable. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

Underlying survey data are not revised after publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series.

For further information on the survey methodology, please contact economics@hismarkit.com.

Full reports and historical data from the KPMG and REC, UK Report on Jobs are available by subscription. Please contact economics@hismarkit.com.

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff.  The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021. 

KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

About REC

The REC is the voice of the recruitment industry, speaking up for great recruiters. We drive standards and empower recruitment businesses to build better futures for their candidates and themselves. We are champions of an industry which is fundamental to the strength of the UK economy. Find out more about the Recruitment & Employment Confederation at www.rec.uk.com.

About S&P Global

S&P Global (NYSE: SPGI) S&P Global provides essential intelligence. We enable governments, businesses and individuals with the right data, expertise and connected technology so that they can make decisions with conviction. From helping our customers assess new investments to guiding them through ESG and energy transition across supply chains, we unlock new opportunities, solve challenges and accelerate progress for the world.

We are widely sought after by many of the world’s leading organizations to provide credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help the world’s leading organizations plan for tomorrow, today. www.spglobal.com.

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