According to the latest KPMG and REC, UK Report on Jobs survey, candidate shortages have slowed down hiring in both permanent and temporary recruitment. Even though expansions are high based on previous records, the increase rates hit 11- and 12-month lows, respectively.
The report, compiled by S&P Global, is based on responses to questionnaires from around 400 UK recruitment and employee consultancies.
The survey found that overall staff supply had the steepest drop in four months. Those surveyed attributed the candidate shortages to the low unemployment rate and uncertainty related to the pandemic and the war in Ukraine. Other reasons included fewer EU workers and robust demand for staff.
The candidate shortage has led to significant increases in starting salaries – the salaries for new permanent employees rose at the quickest rate in 24 and a half years. In addition, the average wages for temporary workers also increased at the fastest pace in three months.
Although all UK regions showed increases, there were variations in the various English regions. The Midlands showed the steepest increase in permanent placements, while the lowest increase was in the South of England.
Further variations were noted between the private and public sectors, with the largest expansion in demand being in the private sector.
The IT and computing industry continues to show the steepest increase in demand. Conversely, the softest increase was in the retail sector.
Neil Carberry, Chief Executive of the REC, commented: “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.”
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.”