KPMG and REC, UK Report on Jobs

Tight labour market conditions lead to further rapid increases in starting pay

Tight labour market conditions lead to further rapid increases in starting pay

Key findings

Starting salary inflation holds close to record high

Labour shortages lead to slower rise in staff placements

Demand for staff remains robust

Data collected April 11-25

Summary

Recruitment activity across the UK continued to rise at a robust pace in April, according to the latest KPMG and REC, UK Report on Jobs survey. However, ongoing candidate shortages weighed on overall growth, with both permanent placements and temp billings expanding at the slowest rates for at least a year as recruiters struggled to fill a number of roles. Although easing slightly from the previous month, the deterioration in total candidate supply remained rapid in April.

Demand for staff rose at a historically sharp pace, despite a slight softening in the rate of overall vacancy growth. Increased competition for scarce candidates placed further upward pressure on pay, with the pace of starting salary inflation holding close to March’s survey record.

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

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Permanent placement growth slips to 13-month low

Recruitment consultancies across the UK registered further sharp rises in both permanent placements and temp billings at the start of the second quarter amid reports of rising activity at clients and robust demand for staff. That said, the rates of growth eased to 13- and 12-month lows, respectively, as low candidate supply constrained the overall upturns in hiring activity.

Permanent Placements Index

Temporary Billings

50.0 = no-change

Graph-pr

Slower, but still rapid, reduction in candidate availability

The overall availability of candidates fell for the fourteenth month in a row in April. The rate of contraction was substantial and much quicker than the series average, despite softening to the weakest for three months. The supply of permanent labour continued to fall at a faster pace than that seen for temporary staff. Recruitment consultancies often mentioned that candidate numbers had fallen due to tight labour market conditions, fewer foreign workers and hesitancy to seek new roles due to the pandemic and geopolitical uncertainty. 

Substantial increases in starting pay for both permanent and temporary workers

A combination of robust demand for staff and scarce supply drove further marked increases in starting pay during April. Notably, the rate of starting salary inflation weakened only slightly from March's record pace (which was the strongest since data collection began in October 1997). Temp wage growth also eased on the month, but remained historically sharp.

Total vacancies continue to rise sharply

Recruitment consultancies signalled a further steep increase in overall vacancies during April, despite the rate of growth easing slightly since March. Permanent staff demand continued to rise at a slightly quicker pace than that seen for temporary workers.

Regional and Sector Variations

On a regional basis, the Midlands posted the steepest increase in permanent placements at the start of the second quarter. That said, rates of growth slowed across all four monitored English areas.

The upturn in temp billings was broad-based across the four monitored English regions, and was led by the Midlands.

Latest data pointed to slower rises in vacancies across both the private and public sectors. That said, increases across all categories remained sharp overall. The steepest upturn in vacancies was signalled for permanent private sector roles, while the softest was noted for temporary positions in the public sector. 

All ten monitored job categories saw sharp increases in demand for staff in April, led by Hotel & Catering. Engineering and Blue Collar came in second and third place in the rankings, respectively.

Hotel & Catering also saw the sharpest rise in temporary staff vacancies at the start of the second quarter. The softest, but still marked, increase in demand for short-term staff was signalled for Accounting/Financial.

Comments

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

“Yet again in April, recruitment challenges abound in every region and every sector of the economy. Employers continue to be relentlessly challenged by attracting and retaining talent, rising costs due to inflation, as well as supply chain pressures. Skills and employment are a key pillar of “levelling up”, yet the recruitment data shows that a one size fits all approach is unlikely to succeed. The regional and sector variations we have seen over the past 12 months of jobs data provide clear evidence that long-term skills development strategies with employers working with all levels of government are urgently needed.”

Neil Carberry, Chief Executive of the REC, said:

“The labour market has been tightening for months on end, driving near-record growth in starting salaries for new staff. With vacancy numbers also historically high, this is a great time to be looking for a job – and a pay rise to help meet the rising cost of living.

“The number of job placements being made is still growing, but at a more stable rate. Growth is now at its lowest level for a year. This is no surprise, given how hot the market has been. Employers need to get their offer to candidates right if they are going to succeed in this market. Enhancing diversity and inclusion, and effective early career hiring are also important elements of a winning approach – consulting a recruitment expert can help with all of this.”

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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