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HospitalityLatest NewsPublic sectorTech sectorJob creation and losses

Salaries heat up as candidate shortages worsen

by Jo Faragher 6 Aug 2021
by Jo Faragher 6 Aug 2021 Permanent roles in IT saw strong growth in July, according to the Report on Jobs
Shutterstock
Permanent roles in IT saw strong growth in July, according to the Report on Jobs
Shutterstock

Starting salaries saw a record rise in July as candidate availability continued to drop and unemployment remained low.

The UK Report on Jobs, compiled by the Recruitment and Employment Confederation and KPMG, revealed that both permanent and temporary staff appointments rose at near-record rates in July.

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The rate of salary inflation was the sharpest in 24 years of collecting this data, the REC said, as employers struggled to find candidates. Temporary billings also grew at their quickest rate since June 1998.

The REC put candidate shortages down to a number of factors, including concerns over job security due to the pandemic, a lack of European workers due to Brexit, and the low unemployment rate.

London saw the quickest expansion in permanent staff appointments, and there were strong increases in temporary staff recruitment in London and the Midlands. The rate of growth in the south and north of England softened slightly, but was still “robust”, according to the report.

Growth was strongest in the private sector, where demand for permanent staff increased at a slightly quicker pace than temporary. In the public sector, short-term vacancies rose more quickly.

IT and computing was the sector with the highest demand for permanent staff, while blue collar and hospitality employers sought the most temporary workers.

Kate Shoesmith, deputy chief executive of the REC, said it was “a good time to be looking for a new job”.

“Employers are desperate to find good candidates for the many jobs on offer and this is reflected in starting salaries rising at the sharpest 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 those on temporary contracts which are also seeing increased pay. Recruiters are working hard to fill places for employers eager to build back and recover but their job is made more difficult by worker shortages across all sectors.”

She added that pay increases in isolation would not solve candidate shortages. “We need an immigration system that flexes to meet demand as was promised, and business and government need a long-term plan for skilling up workers. Skills shortages have been with us for a while and as our data shows are getting worse,” she said.

Claire Warnes, partner and head of education, skills and productivity at KPMG UK, added: “With salaries for new hires increasing at their quickest rate in 24 years and a sharp rise in permanent placements in July, job seekers should be taking advantage of the buoyant market to land their dream role.

“But while companies want to invest in their business now restrictions are lifting, demand for new staff still outstrips supply due to low candidate availability.

We know that reskilling and upskilling is needed to help people move between sectors, and there’s no doubt the ‘pingdemic’ has added an extra dimension to the recruitment challenge. Plus, with furlough due to end soon, there may be a downward pressure on pay to come.

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“That’s why after a tough 18 months, businesses are now hoping for some much-needed stability in the labour market so they can focus on recovery and growth.”

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Jo Faragher

Jo Faragher has been an employment and business journalist for 20 years. She regularly contributes to Personnel Today and writes features for a number of national business and membership magazines. Jo is also the author of 'Good Work, Great Technology', published in 2022 by Clink Street Publishing, charting the relationship between effective workplace technology and productive and happy employees. She won the Willis Towers Watson HR journalist of the year award in 2015 and has been highly commended twice.

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