KPMG and REC UK Report on Jobs - May 2021

Key findings

• Permanent placement growth hits highest since October 1997
• Demand for staff improves to greatest extent in 23 years
• Marked drop in candidate availability places upward pressure on pay

Data collected April 12-26

Summary

The latest KPMG and REC, UK Report on Jobs survey, compiled by IHS Markit, signalled a further marked improvement in labour market conditions in April, with hiring activity rising sharply for both permanent and temporary staff. Recruitment was bolstered by stronger market confidence as the UK began to emerge from the third national lockdown and more parts of the economy reopened. Furthermore, overall vacancies expanded at the quickest rate for 23 years.

The latest survey also highlighted a marked drop in candidate availability, however, as many people were reluctant to seek new roles amid concerns over job security. The reduced supply of workers drove further notable increases in starting salaries and temp pay.

The report is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

Rapid increase in recruitment as coronavirus restrictions begin to ease

The easing of national lockdown measures and brighter outlook for the economy led to a further marked increase in recruitment activity at the start of the second quarter. Permanent placements expanded at the sharpest rate since October 1997, when the survey first began, while temp billings growth remained historically strong. 

Steepest rise in vacancies for 23 years...

The upturn in demand for staff gathered pace in April, with overall vacancies increasing at the quickest rate for 23 years. Permanent vacancy growth outpaced that seen for temporary roles, with the former rising at the quickest rate since March 1998 and the latter to the greatest extent since October 2014.

...but supply of candidates falls markedly...

After broadly stabilising in March, the availability of candidates fell in April, and at the sharpest rate since January 2020. Reduced candidate supply was often linked to ongoing pandemic-related uncertainty preventing people from seeking new roles. There were also mentions that Brexit, IR35 legislation and furlough had reduced the pool of available candidates.

...leading to further increases in both starting salaries and temp pay

Skill shortages and improved demand for staff led to further increases in starting pay for both permanent and temporary staff. Starting salary inflation hit a 14-month high, while temp pay growth improved to its best for a year-and-a-half.

Regional and Sector Variations

Permanent staff appointments expanded at historically sharp rates across all four monitored English regions, with the Midlands recording the steepest increase overall.

Substantial growth in temp billings was seen across all four monitored English areas bar London, where a mild expansion was noted.

Demand for staff continued to rise at a particularly sharp pace in the private sector during April, with permanent vacancies registering a more marked increase than that for temporary roles. Nonetheless, public sector demand for staff rose at a stronger pace compared to March, with temporary vacancies showing a faster rise than permanent roles.

IT & Computing saw the steepest increase in permanent staff vacancies in April, followed by Accounting/Financial and Engineering. Retail was the only sector to register lower demand for permanent staff, though the decline was only modest.

All of the ten monitored job categories recorded higher demand for temporary staff in April except for Retail, which noted a marginal reduction. Blue Collar and Construction registered the strongest rises in demand for short-term workers.

Comments

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

“There’s a lot to feel positive about this month, with the easing of lockdown improving business confidence in the economy and in turn driving a sharp rise in recruitment.

“However, it’s concerning that we’re seeing a drop in candidate supply due in part to applicants needing support to adapt their skills to move from displaced sectors to those where there is more demand, such as health and care, and because the furlough scheme has reduced the pool of workers.

“Companies will not be able to fill their vacancies unless they commit to reskilling and upskilling their current and prospective employees. This includes providing furloughed staff with training and working with recruiters to make sure as wide a range of candidates are considered for jobs. Businesses have a fundamental role to play in bridging the increased skills gap that’s emerged from the pandemic.”

 

Neil Carberry, Chief Executive of the REC, said:

“The jobs market is improving at one of the fastest rates we have ever seen, and that’s great news. We are bouncing back from a record low – and many people are still struggling – but the data shows that job creation is firing up again. This month’s numbers for permanent hiring are the best we’ve seen since the survey started in 1997. Temporary hiring has chalked up its ninth straight month of growth, demonstrating again how important temporary agency work is to getting families and businesses back on their feet.

“The message for government and employers alike is that the long-term challenge is less likely to be high unemployment than attracting and training enough staff to keep our economy firing. Companies need to be thinking about their workforce planning and employee offer, which professional recruitment firms are best placed to support them with. Government needs to urgently tackle shortfalls in the skills system, and make sure the new immigration system is more responsive to our economic needs.”

 

Contact

 

KPMG

Tanya Holden

+44 (0) 203 078 3996

tanya.holden@kpmg.co.uk

IHS Markit

Annabel Fiddes

Economics Associate Director

+44 (0)1491 461 010

annabel.fiddes@ihsmarkit.com

REC

Josh Prentice

Comms Manager

T: +44 (0)20 7009 2129

josh.prentice@rec.uk.com

 

IHS Markit

Joanna Vickers

Corporate Communications

Telephone +44 207 260 2234

joanna.vickers@ihsmarkit.com

 

Methodology

The KPMG and REC, UK Report on Jobs is compiled by IHS Markit 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@ihsmarkit.com.

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

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 21 offices across the UK with approximately 16,000 partners and staff.  The UK firm recorded a revenue of £2.3 billion in the year ended 30 September 2020.

KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 147 countries and territories and has more than 219,000 people 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 IHS Markit

IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.

IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. All other company and product names may be trademarks of their respective owners © 2021 IHS Markit Ltd. All rights reserved.

Disclaimer

The intellectual property rights to these data are owned by or licensed to IHS Markit and/or its affiliates. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit’s prior consent. IHS Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall IHS Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. IHS Markit is a registered trademark of IHS Markit Ltd and/or its affiliates.