Starting pay for permanent and temp staff rose steeply in December 2021 as organisations battled it out for scarce staff.
The latest KPMG and Recruitment and Employment Confederation jobs survey, for December, shows permanent staff appointments and temp billings continue to rise at historically steep rates.
Vacancy growth softened slightly again, easing to an eight-month low, though overall demand for staff remained robust, the survey found. At the same time, the rate of decline in candidate availability has slowed with the latest drop in staff supply the least severe in eight months.
Nonetheless, competition for scarce workers pushed up rates of starting pay for both permanent and temporary staff again, with the respective rates of inflation among the quickest on record.
The availability of workers is testing the resolve of employers across the economy” – Claire Warnes, KPMG UK
Recruitment consultancies recorded substantial increases in permanent placements and temp billings at the end of 2021 with strong demand for staff and greater client requirements. Permanent placement growth continued to outpace the upturn seen for temp billings.
The supply of overall candidates continued to fall sharply during December, but the rate of decline eased for the fourth month running. Recruiters said that uncertainty around the pandemic and the economic outlook, a generally low unemployment rate and fewer foreign workers had weighed on candidate numbers.
The fastest increase in permanent staff appointments in December occurred in the North of England with London seeing the quickest expansion of temp billings.
Vacancies continued to increase at a stronger pace in the private sector than in the public sector in December, with the fastest growth rate being signalled for private sector permanent roles.
IT and computing was the most in-demand category for permanent staff during December, as was the case in the previous month. Nonetheless, steep increases in vacancies were also seen across the other nine monitored sectors.
Nursing/medical/care was at the top of the rankings for temporary staff vacancies at the end of the year.
The softest increase in demand was meanwhile signalled for short-term retail workers.
Claire Warnes, head of education, skills and productivity at KPMG UK, said employers were feeling frustrated with the current situation: “The UK jobs market rocketed to near historic levels as New Year approached. That’s despite it losing a little fizz with the pace of accelerating demand for staff, wage and salary growth and vacancies all easing slightly. Employers in all sectors haven’t lost their appetite to hire, but many will be frustrated by the pressure these inflationary and competitive conditions, which are likely to continue for some time, are putting on their operating costs and ability to expand.”
“The data show that the availability of staff is particularly pressing in the health and care sector, where demand for qualified personnel is running far hotter than availability of permanent and temporary candidates to fill roles. This has been exacerbated by Omicron, through sickness to workers and the need to self-isolate.
“The availability of workers is testing the resolve of employers across the economy and will likely cause distortion in recruitment patterns as businesses shift focus from long-term growth to short-term cover. However, we shouldn’t underestimate the business community’s ability to adapt to these new conditions and look to training and technology solutions to find a way forward.”
Neil Carberry, chief executive of the REC, added that 2022 would be the year “we discover staff shortages will outlive the pandemic as an economic issue”.