The supply of permanent and temporary staff has dropped at its sharpest rate for four months, according to new data on hiring activity in March 2022.
The latest UK report on jobs from KPMG and the Recruitment and Employment Confederation (REC) found that hiring activity was more subdued in March 2022 than in recent months but remained high by historical standards.
Many of the 400 recruitment and employment consultancies polled said that a generally low unemployment rate, uncertainty related to the pandemic and the war in Ukraine, fewer EU workers, and robust demand for staff had limited candidate availability.
Overall vacancies rose for the fourteenth month in a row and at the quickest rate since September 2021. Demand for permanent staff was particularly strong.
The short supply of candidates drove up starting salaries, with starting pay inflation for permanent roles reaching a new record. Average wages for temp workers also rose in March.
It follows recent REC data which showed the number of UK job vacancies posted in March fell to its lowest since mid-January, suggesting that the hiring spree seen since last summer has diminished.
Neil Carberry, chief executive of the REC, said: “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.”
Claire Warnes, head of education, skills and productivity at KPMG UK, said: “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 jobseekers to join or rejoin the workforce in all sectors.”
All four English regions monitored by researchers saw an increase in permanent placements, most notably in the Midlands. Temporary placements also increased, with London seeing the sharpest rise.
Demand for permanent staff rose across all sectors, with IT and computing roles seeing the steepest increase and retail seeing the softest.
The hotel and catering sector experienced the sharpest growth in demand for temporary workers, with retail seeing more subdued demand.