Permanent placements and temporary billings continue to rise strongly, despite sharply falling candidate availability. Further strong rise in permanent salaries, while temp pay growth accelerates.

The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs – published today – provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies.The availability of candidates to fill permanent roles fell further in May. Moreover, the rate of deterioration accelerated to the sharpest since November 1997. Temporary/contract staff availability was also down markedly, with the latest drop only slightly slower than April’s 13-year record.    

Although easing slightly from April’s 81-month high, the rate of growth in permanent salaries remained considerable in May. Temporary/contract staff hourly pay rates meanwhile rose at the fastest pace since December 2007. Permanent placements growth remained marked in May, despite moderating slightly since the previous month. Temporary/contract staff billings also rose strongly, with the rate of expansion quickening from April’s ten-month low. Overall demand for staff continued to increase at a marked rate in May, although the pace of growth eased to a five-month low. Permanent vacancies again rose slightly faster than temporary/contract roles.

The Midlands continued to register the strongest growth of permanent placements in May, while the slowest rise was indicated in London. Temp billings growth was fastest in the Midlands, followed by the South. London and the North posted similar robust rates of expansion. Private sector demand for staff remained considerably stronger than that in the public sector, according to the latest data. In both sectors, vacancy growth was faster for permanent employees than temporary staff. Accounting/Financial took over top spot in the demand for staff ‘league table’ in May. Engineering dropped to second place, although continued to register a marked rate of expansion overall. The slowest growth was signaled for Blue Collar workers.

Blue Collar workers were the most in-demand type of temporary staff in the latest survey period. Mirroring the trend for permanent employees, Engineering took second place in the table. Nursing/Medical/Care staff saw the slowest rise in demand for their services. REC CEO Kevin Green said:“The UK’s jobs boom continues with vacancies increasing as employers look for new workers to meet increasing demand and to replace staff that have been snapped up by competitors. The creation of these jobs, combined with the return of job fluidity, is creating a dynamic labour market. However the big issue remains that employers are finding it hard to find the talent and skills they need, yet ONS figures show that we still have 2.2 million unemployed people in the UK. The political debate around immigration must acknowledge this skills shortage. Now is the time for government to reform the visa system to ensure that the UK retains a flexible labour market so our businesses can grow and create more jobs. This will give young people and the long term unemployed greater opportunities to enter the workforce and successfully progress up the career ladder.”

Bernard Brown, Partner and Head of Business Services at KPMG, comments: “Trying to fill vacancies in the current climate must feel like wandering through a hall of mirrors for the UK’s employers. No sooner are they in a position to reflect the improving economy by creating roles and offering tempting salaries, than the search for talent seems to reach a dead end, with candidates either preferring to hide in the shadows or failing to offer the appropriate skills. “The latest figures also suggest that employees want more from their workplace than better pay and better benefits.  Even though starting salaries continue to rise, job seekers are sending out a very clear message that remuneration is not the only reward they are after.  With candidate availability at its lowest point for almost 17 years, individuals are saying that prospective employers are going to need to widen their offer to tempt top talent to move.  It could mean that we have finally reached a point where employers have to consider reshaping roles, working arrangements and their own expectations or risk being caught out by an endless cycle of unfilled roles and unfulfilled workers struggling to cope with increasing workloads.”