The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs, provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies. 

Staff placements continue to rise strongly, March survey data highlighted further marked growth of recruitment activity across the UK. Permanent staff placements rose at a rate unchanged from February’s considerable pace, while temp billings growth was only slightly slower than the five-month high recorded in the preceding period. The survey’s index of job vacancies rose to a five-month high in March, signalling strong demand for staff. Marked rates of expansion were indicated for both permanent and short-term workers.

Average starting salaries for people placed in permanent job roles increased further in March. The latest increase was the strongest since last September. Hourly rates of pay for temporary/contract staff rose at a robust pace, albeit slightly slower than in February. The availability of staff to fill vacancies continued to decline in March. The latest drop in permanent candidate supply was the sharpest in four months, while temp availability deteriorated at the fastest pace since last October. Bernard Brown, Partner and Head of Business Services at KPMG, comments: “Recruiters are struggling with industry-wide skills shortages, as demand for talent continues to outstrip the number of candidates seeking work. This pervasive skills shortage could put the brakes on economic growth if it continues unabated.

“Nervousness in the run up to the election could be one factor seizing the market, as candidates seek certainty before leaving the safe haven of their current role.

“This tightening labour market is forcing up wage inflation as businesses bid for the best talent. Such a trend could cause a two-tier pay market, creating a significant divide between highly paid new starters and current employees receiving subdued pay increases. This dynamic will cause businesses problems in the long term as they struggle to keep hold of talented staff increasingly dissatisfied by their remuneration packages.”

All four monitored English regions saw rising permanent placements during March, with growth strongest in the Midlands and the South. Midlands-based agencies recorded the fastest increase in temp billings during the latest survey period. Private sector demand for staff remained stronger than that in the public sector during March. Private sector permanent vacancies registered the sharpest increase overall. All monitored types of permanent staff registered higher levels of demand for their services in March. The most sought-after categories were Engineering and Accounting/Financial, marginally ahead of Executive/Professional.

Growth of demand was broad-based across all monitored temp categories during the latest survey period. The sharpest increase was signalled for Nursing/Medical/Care workers, with Blue Collar staff seeing the next-fastest rise. Kevin Green, REC chief executive, says: “Almost a third of recruiters say that starting salaries have increased in comparison to last month, and we’ve seen another increase in the number of people that have found a new job via a recruiter. “This suggests that labour market fluidity is returning – candidates are more confident about looking for work, and there are opportunities to earn more for those that do. Employers need to realise that people are deciding to change jobs because they can earn more than in their current job.

“Increases in starting salary offers are being driven by skills and talent shortages across the economy, and businesses are going to have to think hard about retaining scarce resource. “We have acute shortages in the public sector, with recruiters reporting that teachers and healthcare workers are hard to find both for permanent and temporary vacancies. As politicians debate skills, education and immigration in the run up to the election, we hope they recognise the potential impact of this skills crisis, because a lack of workers to meet demand threatens the sustainability of our economic growth.”