UK recovery under threat from lack of candidates

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A shortage of workers is inhibiting the jobs recovery in the UK as the country’s Covid crisis recedes.

The reopening of more sectors of the economy triggered a sharp increase in hiring activity in May, according to the latest KPMG and REC Report on Jobs survey.

Demand for workers increased at the fastest rate for over 23 years with permanent appointments rising at a record pace. Temp billings growth was also at unprecedented levels.

However the supply of workers has fallen markedly, with overall candidate availability declining at the quickest rate since May 2017 and the rise in vacancies the most rapid since 1998.

This, said the researchers, was linked to fewer EU candidates, furloughed staff and lingering pandemic uncertainty causing a reluctance to seek out new roles.

Workers were especially needed in IT and computing, as well as hospitality, the survey found. Retail only saw a modest growth in demand.

Rising vacancies with fewer candidates has led to increases in starting pay, with both starting salaries and temp pay rising faster than in April.

On a regional level the north of England saw the steepest increase in permanent staff appointments of all four monitored English regions, though rates of growth were high elsewhere, too.

The North also saw the steepest increase in temp billings whereas the Midlands recorded a relatively modest rate of growth, and London was described as “stagnant”.

Vacancies and demand for permanent staff rose far more rapidly in the private than the public sector.

Claire Warnes, partner and head of education, skills and productivity at KPMG UK, said the job market “seemed to be firing on all cylinders” but added that the deterioration in staff supply and availability was a “worrying trend”.

She called for new policies to support employment: “We need businesses and recruiters working alongside government to urgently address the skills gap by supporting candidates and employees to upskill and reskill to move into new roles. This will be crucial to our recovery from the pandemic and the levelling up of opportunities across the UK.”

Kate Shoesmith, deputy CEO of the REC, called on employers to look at wage and benefit packages and meet the demand for hybrid and flexible working. Government action, however, was key. Ministers urgently needed to look at “improving access to work and opportunities for everyone to participate in training that will lead to a job. This should start with careers information that signals where job openings are being created and funding for the relevant work-related training.”

A government spokesperson said: “Our multi-billion pound plan for jobs, including the Kickstart scheme, is supporting employers across the country to create jobs and help jobseekers get the skills and experience needed to develop their careers and fulfil roles for years to come.

“Additionally, we have increased the apprenticeship hiring incentive to £3,000 per new apprentice hire and our lifetime skills guarantee – worth the equivalent of around £3,400 per person – ensures all adults can gain new skills and qualifications.”

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

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