United Kingdom – Recruitment activity on the rise as starting salaries hit record highs


06 Aug 2021

Recruitment activity continued to increase strongly in the UK at the start of the third quarter, according to the latest Report on Jobs survey from the Recruitment and Employment Confederation and KPMG.

Permanent staff appointments and temporary billings have both increased at near-record rates, while starting salaries have increased at the fastest rate on record.

Strong demand for staff and the further decline in restrictions linked to the pandemic led to a sharp increase in the number of people placed in permanent positions in July, with growth only moderating slightly from the all-time high in June. Temporary billings have increased at the fastest pace since June 1998.

Data broken down by region showed marked increases in permanent staff appointments in the four English-speaking regions monitored. London was by far the fastest growing, which was the fastest on record.

The faster increase nationwide was supported by stronger increases in temporary billing in London and the Midlands. Growth slowed in the south and north of England, but remained broadly robust.

Stronger increases in job vacancies in the private sector offset weaker increases in the public sector in July. In the private sector, the demand for permanent staff has grown at a slightly faster rate than that for temporary workers. In contrast, short-term vacancies have grown faster than permanent positions in the public sector.

Growing demand for staff and a further sharp decline in the supply of candidates have resulted in a faster increase in permanent starting salaries. The rate of wage inflation was the highest in nearly 24 years of data collection. Meanwhile, hourly pay rates for temporary / contract staff increased at the second fastest rate since the start of the survey.

The report also found that the latest job vacancy data indicated a faster increase in demand for permanent and temporary workers in July. Growth in demand for permanent staff reached a new series record, while the recovery in temporary vacancies was the strongest since November 1997.

Persistent uncertainty stemming from the pandemic and concerns about job security contributed to another significant drop in candidate availability in July. Brexit was also cited as a key factor reducing the supply of workers, especially temporary staff. Overall, the number of applicants fell to the second-highest rate in survey history, declining only slightly from June’s record high.

Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK, said: “With the salaries of new hires increasing at their fastest pace in 24 years and a sharp increase in permanent placements in July , job seekers should take advantage of the growing market to land the role of their dreams.

“But while companies want to invest in their business now that the restrictions are lifted, the demand for new staff still exceeds supply due to low candidate availability,” Warnes said. “We know that retraining and development are necessary to help people move from one industry to another, and there is no doubt that ‘pingdemia’ has added an extra dimension to the recruiting challenge. In addition, with the end of holidays looming, there could be downward pressure on future wages. “

“This is why after 18 difficult months, companies are now hoping for some much needed stability in the labor market so that they can focus on recovery and growth,” Warnes said.

Kate Shoesmith, Deputy Managing Director of REC, added: “Employers are desperate for good candidates for the many jobs on offer and this is reflected in starting salaries which are increasing at the fastest rate since the survey began in 1997. This will likely motivate more people to be on the lookout for new opportunities. The same goes for temporary workers who also benefit from a salary increase. Recruiters are working hard to fill the positions of employers eager to rebuild and recover, but their jobs are made more difficult by shortages of workers in all sectors.