Recruitment Market Update

Bringing you the latest industry updates regarding the temporary and permanent employment market, collecting data sourced from the Recruitment & Employment Confederation (REC), CIPD, KPMG and the Office for National Statistics (ONS). We hope you find it informative and a source of valuable information.
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May 2022 Update

According to the latest data, recruitment intentions are still above pre-pandemic levels and appear to be on an upwards trajectory, with 74% of employers stating they are planning to take on new staff in the next quarter.  However, candidate shortage difficulties remain with 45% saying they have hard-to-fill vacancies.

44% of employers have tackled hiring difficulties by increasing salaries, but it’s thought they may be reaching a limit now with only 27% anticipating raising pay in future to address candidate shortage.  

On a positive note, companies are also looking to other means to tackle staffing challenges with 39% focusing on upskilling existing staff and 38% advertising more jobs as flexible.  These actions will hopefully aid recruitment, as well as staff retention in the future.

Hiring Activity

Job vacancies have risen to a new record of 1,295,000, an increase of 33,700 from the previous quarter, however the rate of growth in vacancies has continued to slow down.  Feb to April 2022 saw all industries rise above their Jan to March 2020 pre-pandemic levels, with the largest increases in construction, the arts, recreation and entertainment.

This chart shows the increase in overall active job adverts since the beginning of 2022.

The start of Q2 registered continued sharp rises in both permanent placements and temporary billings amid reports of rising client activity and demand for staff.  However, there are signs of this level of growth easing as low candidate supply hindered upturns in hiring activity.

Employment Data

The UK employment rate was estimated at 75.7%, 0.1% higher than the previous three month period and 0.9% lower than before the pandemic.  The increase in employment rate was driven by the movement of people aged 16-64 years from unemployment to employment.  However, there was also a record high movement of people from economic inactivity into employment. See chart below.

Interestingly, total job-to-job moves also increased to a record high of 994,000 driven by resignations, rather than dismissals during the Jan to March 2022 period.  

The UK unemployment rate was estimated at 3.7%, 0.3% lower than the previous three month period and 0.2% lower than before the pandemic.

Total hours worked increased compared with the previous three month period, but are still below pre-pandemic levels.

The redundancy rate of 13% remains low at pre-pandemic levels.  This figure stood at 33% in summer 2020 and at 16% prior to the pandemic.  

Topical Data – Enhance job quality for workers and business outcomes using technology

The latest research from the CIPD, the professional body for HR and people development, shows understanding of key people issues and consultation with staff is needed for investment in technology to lead to positive outcomes. 

Evidence has identified that wider adoption of digital technology by organisations is needed to boost UK productivity and lift living standards for employees over the longer term.  However, it’s important to manage employees effectively to ensure they understand any new requirements using new technology to boost firm performance.

To support employers, the CIPD, in collaboration with the Institute for the Future of Work, has created a guide on how to invest responsibly in technology, setting out five key stages for consideration.  Click here.

Topical Data – ED&I

As part of the REC’s Jobs Outlook survey published in May, feedback identified that a significant proportion of employers have not implemented any of the ED&I policies below as part of their hiring process.

The most common method employers applied to their recruitment processes was ‘using wording specifically adjusted to be inclusive in our job adverts’, with 31% introducing this more than a year ago and 18% in the last year.  While 29% of employers started specifically stating an interest in diverse candidates within their jobs adverts, more than a year ago.

Click for our blog: Why gender-neutral language improves recruitment adverts

Commenting on the latest ONS market figures, Jonathan Boys, labour market economist for the CIPD, comments:

 “The labour market remains tight. At 3.8% unemployment is incredibly low. However, pay is struggling to keep pace with rising prices. Today’s statistics look backwards but it’s what’s to come that is concerning.  The OBR forecasting that inflation could reach 8.7% this year. The big pay squeeze is still in the pipeline. Employers have a big role to play in supporting their staff through this time. If the ability to award pay rises is limited, employers can look at the total employment offer. This includes designing jobs that include ample flexible working options. Financial wellbeing support can make a difference, as can revisiting the mix of benefits offered to make sure they work hard for employees, especially the lowest paid.” 

Figures and data sourced from the ONS, CIPD and REC

April 2022 Update

The UK labour market continues to create jobs, but pay growth is still struggling to keep up with inflation, according to the latest ONS data. 

The latest data shows a labour market that continues to tighten, with employment figures largely unchanged, unemployment decreasing, and vacancies at a new record high.

Real time Pay-As-You-Earn data for March 2022 showed that the number of pay-rolled workers saw a small increase, up by 35,000 to a record 29.6 million, in part because of an increase in full time employees.

Hiring activity

More employers are looking to hire permanent staff, despite economic worries, according to the REC.

According to Neil Carberry, Chief Executive of the REC, “Businesses are seeing tax rates and uncapped energy costs rise, as well as pressure on salaries from staff who are seeing their own bills go up. So it is no surprise that firms are more concerned about the outlook. But British firms are resilient and investment in staff and growth remain on the agenda when employers think about their own business.

“We expect to see employers’ hiring plans decouple further from their economic outlook over the coming months as they face a tight labour market. Firms will need to find new, creative ways to attract candidates, as well as keep hold of the talented staff they have. Recruiters will play a vital part in helping them to do so.

“More employers are switching their hiring intentions towards permanent staff, as the urgent need for contingency staff to cover Covid absences decreases. But temporary workers remain vital to managing uncertain and fast-changing markets.”

Employment data

UK unemployment dropped back to its pre-pandemic level at the beginning of 2022, but there’s been further pressure on living standards, as earnings failed to keep pace with inflation despite record levels of vacancies.

The jobless rate averaged 3.8 per cent in the three months to February, returning to lows last seen in 2019, the Office for National Statistics.

Annual growth in total pay was 5.4% and regular pay was 4.0% in December 2021 to February 2022:

March 2022 Update

This month sees a further marked increase in hiring activity with data indicating more positive expectations for the economy in 2022, as highlighted by the Bank of England’s Quarterly Monetary Report advising that the UK economy is continuing to recover with economic activity back to where it was before the pandemic.

Despite rising inflation and candidate shortages with people facing a larger than usual increase in the cost of living, the Bank of England is still expecting the UK economy to grow over the next few years.  They expect inflation to rise up to 7% in the spring and have responded by increasing interest rates to help inflation return to their 2% target – an action designed to support people’s jobs and incomes.

Hiring Activity

Hiring activity for permanent staff continued to expand during February, but at the slowest rate seen for 11 months.   The need for temporary staff also rose, but at a softer pace than in previous months with the steepest increase recorded in London, followed closely by the North of England.

In contrast, overall vacancies expanded at the quickest rate for 3 months, marking the first acceleration of growth since last July with a record high of 1,318,000 vacancies, 533,000 higher than pre-pandemic levels.  See chart below indicating how the number of active job adverts in the UK has risen since the beginning of 2022.

Employment Data

The UK employment rate increased by 0.1% on the quarter to 75.6% with full-time employees driving this increase during the last three-month period. 

Again, we have seen a drop in the unemployment rate by 0.2% on the quarter to 3.9%.

The number of self-employed workers remains low following decreases through the pandemic, playing a part in candidate shortage as instead of returning to work, people have gone back into education, sought early retirement etc. 

The number of economically inactive people aged 16-24 has been falling since 2021, with the latest data for the last three months showing those aged 50-64 driving the recent increases in economic inactivity.

Redundancies have dropped again across the last three months, to a record low of 2.4 per thousand employees, following the end of the Coronavirus Job Retention Scheme. 

Topical Data – Candidate Shortage

As part of the REC’s Jobs Outlook survey published in March, feedback identified that almost half of employers (47%) reported that the lack of foreign nationals in the UK labour market had no impact on their business. 

However, 19% said that they have increased starting salaries as a consequence. In addition, one in six (16%) employers increased the hours of their existing workforce to combat the lack of foreign nationals in the UK, while 13% have seen a decline in productivity and/or profits.

When asked, what, if anything, have been the consequences for your business of a lack of foreign nationals in the UK labour market?  Organisations responded as below:

Commenting on the latest ONS market figures, Neil Carberry, Chief Executive of the REC, said:

“Businesses across the country are doing what they can on pay, both for existing staff and to help them hire in a jobs market experiencing a severe labour shortage. But rising inflation both makes that effort hard, and reduces the gains workers feel from pay rises. In real terms, average pay has fallen compared to last year. Now is not the right time to be increasing taxes on work for both companies and workers. 

A key way to reduce the pressure on our economy and keep inflation down will be to focus on ensuring employment rates and hours worked recover to pre-pandemic levels. Inactivity is still rising, so firms and government need to work together to address this. Recruiters have a key role to play here, from helping government with activation schemes to supporting employers with new forms of job offer to tempt people back into work.”

Figures and data sourced from the ONS and REC

February 2022 Update

Increase in hiring

The latest KPMG and REC, UK Report on Jobs survey signalled a further growth in hiring activity at the beginning of 2022. However, permanent placement growth dipped slightly since December, while the upturn in temporary assignments increased.

Temporary employees

The number of temporary workers as a percentage of total employment was 6.08%, up from 5.66% when compared to the previous year.

Out of the 1.71 million temporary employees during the period ended December 2021, approximately 442,484 were temporary because they were unable to find a permanent job; 460,548 were not looking for a permanent job; 157,047 had a contract with a period of training; and 653,828 stated other reasons. 

Of the 1.71 million temporary workers during the period, approximately 750,502 were male while 963,407 were female.

“Temporary work is helping firms to keep things moving, as it always does, highlighting the crucial role the staffing industry plays in the economy. But business and government must now work together on attracting more people, from a wide variety of backgrounds, into the labour force. Failing to address shortages will only constrain growth and feed inflation,” said Neil Carberry, Chief Executive of the Recruitment & Employment Confederation.

Employment rate 

Meanwhile, ONS data showed the UK employment rate was estimated at 75.5%, 0.1% higher than the previous three-month period, but 1.0% lower than prior to the Covid-19 pandemic (December 2019 to February 2020). 

For the three months ending December 2021, the highest employment rate estimate in the UK was in the East of England (79.1%); the lowest employment rate was in Northern Ireland (70.7%).

The period from November 2021 to January 2022 saw the number of vacancies reach another record high of 1,298,400, though the rate of growth continues to slow.

Employment rate (all aged 16 to 64):

Increase in starting salaries

Starting salaries continue to rise at near-record pace amid sharper drop in candidate supply.

Growth in average total pay (including bonuses) was 4.3% and growth in regular pay (excluding bonuses) was 3.7% among employees in October to December 2021. 

In real terms (adjusted for inflation), total and regular pay fell on the year at negative 0.1% for total pay and negative 0.8% for regular pay. Previous months’ strong growth rates were affected upwards by base and compositional effects.

Hybrid working vs office based

As part of an employer survey carried out by the Recruitment & Employment Confederation last month, interestingly the results identified that 40% of candidates applying for vacancies since the beginning of the pandemic in March 2020 favoured working from business premises only. 

Official data from the Office for National Statistics suggests that between 10th and 23rd January 2022, 16% of the UK workforce was working via a hybrid model whilst 15% were exclusively working from home.   Full results below.

January 2022 Update

Britain is emerging from the pandemic with continued robust levels of employment, supported by the latest data for December highlighting the number of employees on UK company payrolls rose by 184,000 on the month to 29.5 million, an increase of 409,000 on pre-pandemic levels. This includes a notable increase in those employed on a part-time basis.

However, with inflation rising in January to its highest level in at least a decade and a general increase in living costs, namely food and fuel, employment experts are predicting a squeeze on living standards as we start 2022.

On a positive note for the jobs market, despite the end of the furlough scheme, unemployment rates continue to fall, dropping to 4.1% which is close to where it was before the pandemic in spring 2020.

Good news for redundancies too as rates are also continuing to descend, dropping by 0.8% to its lowest level on records dating back to more than quarter of a century of 2.8 per thousand employees.

Vacancies across most industries achieved a new record for the period Oct to December of 1,247,000, an increase of 462,000 from the pre-pandemic Jan to March 2020 period.

Candidate availability is still falling and with demand for staff growing across every sector, it’s thought that staff shortages will outlive the pandemic as an economic issue.  With demand continuing to outstrip supply, starting salaries for permanent and temporary workers have continued to rapidly rise. 

Interestingly, trends have shown that workers have been moving into different occupations and the average age of those in employment has increased with the number of younger workers (aged between 16-34 years) falling by 2.5% and the movement of workers into redundancy (including voluntary) nearly doubling for those aged 55 years; both of these factors contributing to candidate shortage.

ONS data below shows this trend starting in 2021 for those workers who have not stayed in the same occupation:

Commenting on the candidate shortage, Neil Carberry, Chief Executive of the REC, said:

“Businesses need to make sure they are reacting to the long-term challenges of this market, thinking harder about their offer to staff and how to shape their future workforce. Recruiters are ideally positioned to help employers with this, and support governments across the UK on the skills, immigration and tax reforms that are needed to keep us competitive.”

Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said: 

“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 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.”

Figures and data sourced from the ONS and REC

December 2021 Update

Information from the REC and ONS show vacancy levels continuing to hit new highs, unemployment remaining low and economic inactivity high resulting in candidate availability still proving to be hugely challenging for employers. “There is now little doubt in anyone’s mind that the labour market is becoming ever tighter,” said Kitty Ussher, chief economist at the Institute of Directors and the data certainly supports that.

Unemployment

The UK unemployment rate in the three months to November 2021 decreased by 0.4 percentage points on the quarter to 4.2%.   Young people (those aged 16 to 24 years) who have been particularly affected by the pandemic, have seen an increase in the employment rate and a decrease in the unemployment rate to below pre-coronavirus rates.

Economic Inactivity

Economic inactivity has also ticked up this quarter and remains 400 thousand higher than pre-crisis. This is being driven by ill health and early retirement.  Combined with a slightly smaller population, this means that there are now one million fewer people in the labour market than would have been expected on pre-crisis trends, with more than half of this gap now explained by fewer older people in the labour force.

August to October 2021 ONS estimates show a quarterly increase in the employment and economic inactivity rates, while the unemployment rate decreased

Vacancies

The number of job vacancies in September to November 2021 continued to rise to a new record of 1,219,000, an increase of 434,500 from the pre-coronavirus pandemic January to March 2020 level. However, on the quarter, the rate of growth in vacancies continued to slow down and the single month vacancy estimates showed their first reduction in vacancy numbers since February 2021.

Pay

In August to October 2021, annual growth in average total pay (including bonuses) was 4.9% and regular pay (excluding bonuses) was 4.3%. Previous months’ strong growth rates affected by temporary factors have largely worked their way out of the latest growth rates, however, a small amount of base effect for certain sectors may still be present.

Temporary Workers

The number of temporary employees in the UK account for 6% of the overall employment figure for the 3 months up to October 2021 which stood at 75.5%. This is at its highest level since early 2017.

Hiring Intentions / Productivty

Hiring intentions are increasing and we expect it to remain so into 2022. Despite the end of furlough and government support, the labour market is still tight which exacerbates the challenge to find, attract and retain great staff.

Rishi Sunak, UK chancellor, said the jobs outlook remained strong and the government would continue to “respond proportionately” to the changing path of the virus.

But Matthew Percival, director of employment at the CBI employers’ organisation, said continued difficulties in hiring, combined with the emergence of Omicron, meant that businesses faced a “challenging winter” and that further support might be needed for the sectors hardest hit by new coronavirus restrictions.

 

November 2021 Update

Despite furlough coming to an end, October data signalled a continued strong rise in recruitment activity across the UK, with unemployment falling towards pre-pandemic levels and employment growth in evidence.

Candidate shortages remain in all sectors across the economy with data highlighting that employers have been raising starting salaries at record pace to try and attract the best candidates.  However, nearly 2.2 million people started new jobs in the summer – the highest level and rate in at least 20 years.  This increase in employment was driven by a record high flow of 304,000 people from unemployment to employment, largely caused by resignations, rather than dismissals.

The combination of falling unemployment and vacancies growing from strength to strength across all industries has resulted in the lowest number of unemployed people per vacancy since at least the 1960s.

The availability of candidates simply cannot keep up with vacancy demand which is holding back growth and adding to inflation.  One cause of these issues is far lower labour market participation than on pre-pandemic trends.

Industry experts predict that the mismatch between demand and supply will continue and the solution lies through measures to increase supply participation and improve skills matches.  More focus needs to be on supporting those out of work and those not looking for work.  Companies also need to continue to do more support retention work and more inclusive recruitment, offering greater flexibility, job security, training and induction combined with wellbeing in the workplace support.

According to the latest employment figures from the ONS and REC: 

  • Inflation rate increases to 4.2% in October.
  • The number of job vacancies in August to October 2021 continued to a new record of 1,172,000, an increase of 388,000 from its pre-pandemic (January to March 2020) level.
  • The UK employment rate increased by 0.4% on the quarter to 75.4%.
  • The UK unemployment rate decreased by 0.5% on the quarter to 4.3%.

Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said: 

“While its encouraging to see hiring activity increase in October, the recovery was at the softest rate recorded in six months due to the ongoing deterioration of candidate availability.  Employees are hesitant to switch roles and sectors, which could impact the bounce-back recruiters have experienced since the easing of pandemic restrictions.  

More broadly, companies are still offering higher salaries to attract and secure talent – with starting pay inflation reaching another record high this month – but we know this isn’t the answer to boosting productivity.

Job seekers need to feel confident that the skills and qualifications they’ve gained in one sector are valued in another.  That’s why employers and Government must urgently invest in training and development if they are to attract a wider range of candidates into these high demand sectors.

October 2021 Update

September saw a continued rise in recruitment activity across the UK, driven by robust demand for staff and rising economic activity.  At the same time, a near-record fall in candidate availability drove substantial increases in starting pay. Notably, permanent starters’ salaries and temp wages both rose at the sharpest rates in 24 years. 

The Recruitment & Employment Confederation (REC) responded by pushing on with their campaign requesting that the government and businesses address the issues outlined in September’s update below.  Their latest activity throughout October included:

  • Meeting with the Minister for Employment, Mims Davies MP, on 21st October to refresh and re-sign the partnership agreement between the REC and the Department for Work & Pensions (DWP). 

  • Giving evidence to the Business, Energy & Industrial Strategy (BEIS) Committee on 19th October, telling MPs that government must overhaul the skills system in order to solve current and future labour shortage issues.

  • Ahead of the Budget, urging the Treasury to consider how the spending review will enable businesses to drive prosperity in the years to come and help firms to increase investment in technology, skills and management practices.

  • Writing to Simon Clarke MP, Chief Secretary to the Treasury, last week warning that the current trend of rising wages is only affordable if they rise sustainably alongside improvements in productivity, advising that the only workable answer to this lies in increasing business investment across the board.

According to the latest employment figures from the ONS and the REC:

  • In the week 4-10 October, there were 2.29 million active job adverts in the UK, a new record high, with growth in job adverts showing no signs of slowing down.
  • Inflation rate falls to 2.9% in the year to September 2021. 
  • Permanent placement growth expanded at a pace only slightly lower than August’s all-time high with temporary billings remaining marked.
  • The number of job vacancies in July to September 2021 was a record high of 1,102,000, an increase of 318,000 from its pre-pandemic (January to March 2020) level; this was the second consecutive month that the three-month average has risen over one million.
  • The UK employment rate was estimated at 75.3%, 1.3% lower than before the pandemic (December 2019 to February 2020), but 0.5% higher than the previous quarter (March
    to May 2021).
  • The UK unemployment rate was estimated at 4.5%, 0.5% higher than before the pandemic, but 0.4% lower than the previous quarter.  
  • The redundancy rate remains at pre-pandemic levels.

Whilst presenting evidence to the Business, Energy & Industrial Strategy (BEIS) Committee, Neil Carberry, Chief Executive of the Recruitment and Employment Confederation said:

“We need a revolution on how we offer training for work if the UK is to fully recover from the pandemic and prosper in the coming months and years. This includes broadening the apprenticeship levy so that funds can be used on other accredited training at levels that will help young people into work and support the levelling up agenda, rather than being spent on in work graduates.

As part of the session, he also told the committee that immigration is one part of the solution to solving the current shortage and supply chain problems.

“Immigration policy has been stuck in a Brexit time-warp. For businesses, Brexit is done – what we need is an immigration system that works for the economy.”

 

September 2021 Update

August saw a further rapid increase in hiring activity as improved confidence in the market led businesses to pursue their recruitment plans.  With demand for staff close to an all-time high and vacancies rising by 35% in the space of three months; in an effort to solve the candidate shortage crisis, the Recruitment & Employment Confederation (REC) responded by requesting that the government and businesses: 

  • Set up a new cross-government and industry forum including industry experts; Department of Business, Energy & Industrial Strategy (BEIS), Department for Education (DfE) and Department for Work & Pensions (DWP).
  • Allow flexibility in the points-based immigration system and a visa route for lower skilled workers to enable logistics to access staff at times of need.
  • Broaden the apprenticeship levy and increase funding for training at lower skill levels to help transition opportunities for temporary workers to encourage business to do more in the UK. 
  • Increase focus from businesses on workforce planning, staff engagement, attraction and retention policies.  Needs to be addressed at senior leadership level and firms are to be encouraged to work with key professional partners, such as recruiters, to boost performance, productivity and staff wellbeing.

According to the latest employment figures from the ONS and the REC:

  • Unprecedented drop in candidate supply drives sharper increases in pay – the declines are attributed to a reluctance among employees to switch roles due to the pandemic, fewer EU workers, furloughed staff and skill shortages.
  • The labour market shows continuing recovery with a quarterly increase in the employment rate, while the unemployment and economic inactivity rates decreased. 
  • Permanent placement growth hits a record high with temporary billings rising sharply.
  • The UK employment rate is estimated at 75.2%, 1.3% lower than before the pandemic, but 0.5% higher than the previous quarter.
  • The UK unemployment rate is estimated at 4.6%, 0.6% higher than before the pandemic, but 0.3% lower than the previous quarter.  
  • The number of part-time workers decreased strongly during the pandemic, but surprisingly has been increasing since April 2021, making up the majority of the increase in employment in the last period.

With the furlough scheme due to close at the end of this month, some economists have said that the economy appeared to be well prepared for the end of furlough, suggesting that record job vacancies could help prevent a sharp rise in unemployment.  

However, Nye Cominetti, Senior Economist at the Resolution Foundation, said:

There is still ground to make up in the labour market.  With the furlough scheme ending in September, we should expect a fresh rise in unemployment this autumn, particularly among furloughed staff that aren’t able to return to their previous jobs.”

Commenting on the latest labour market survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said:

Candidate shortages continue to plague businesses, who are all recruiting from the same pool of talent and struggling to fill gaps.  While record high permanent placements and higher starting salaries mean it remains a job seeker’s market, recruiters and employers have seen the most severe decline of candidate availability in our survey’s history and will be thinking about how to attract and retain new staff.

This crisis isn’t going away, and the winding down of the furlough scheme at the end of September – while potentially bringing more job hunters to the market – could also add fuel to the labour shortage fire.  Many businesses will have changed their business model during the pandemic, and so significant numbers of staff returning from furlough may need reskilling to rejoin the workforce in the same or another sector.

Right now, businesses can lead the way by working with government and civic leaders to rapidly address the reskilling and upskilling that is so urgently needed.”

August 2021 Update

As seen in recent news reports, July saw a record rise in job vacancies since the beginning of the pandemic – exceeding over 1 million in the month! 

Whilst this may indicate a positive sign of the continued post-pandemic recovery, it is against a backdrop of of the worst staff shortages since the late 1990s. The outcome is  pressure on pay with starting salaries rising at the fastest rate in over 20 years and hourly pay rates for temporary/contract workers starting to increase.

According to the latest employment figures from the ONS and the REC:

  • The most recent data show the labour market continuing to recover.
  • The single month vacancy estimates in July exceeded 1,000,000 for the first time since the pandemic.
  • There were around 204,000 new job adverts posted in the first week alone in August, resulting in 1.65 million active job adverts in the same week in the UK (including unfilled July vacancies carried into this month) . 
  • There were an estimated 953,000 job vacancies in May to July 2021, a record high, having grown by 290,000 compared with the previous quarter and 168,000 more than its pre-pandemic level (January to March 2020).
  • In the latest period (April to June 2021), there was a quarterly increase in the employment rate of 0.3 percentage points, to 75.1%, and a decrease in the unemployment rate of 0.2 percentage points, to 4.7%.
  • The economic inactivity rate is down 0.2 percentage points on the previous quarter, to 21.1%.
  • With the relaxation of many coronavirus restrictions, total hours worked increased on the quarter, however, it is still below pre-pandemic levels. The redundancy rate decreased on the quarter and has returned to pre-pandemic levels.

In response to the latest labour market figures published by the ONS, Neil Carberry, Chief Executive of the REC, said:

The robust jobs recovery suggested by business surveys is confirmed by the [ONS] figures, and that is great news. But record vacancy numbers once again emphasise the risk posed by labour shortages in many key sectors. The number of vacancies is now at an all-time high and is still rising, with employers desperate to hire new staff as the economy recovers. The increase in temporary workers again emphasises the vital role this type of engagement plays in helping firms stay productive when skills are scarce.

According to ‘UK Report on Jobs’ published by KPMG and REC, the continued decline of candidates in July was driven by concerns over job security due to the pandemic, a lack of European workers due to Brexit, and a generally low unemployment rate. As a result, pay pressures intensified, with starting salaries rising at the fastest rate in the survey history, and temp pay inflation also accelerating notably on the month. 

Commenting on the latest survey results from the report Kate Shoesmith, Deputy Chief Executive of the REC said:

“This month’s data confirms that it is a good time to be a 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.”

July 2021 Update

According to the latest employment figures from the REC and ONS:

  • Statistics show that the capital’s job market is back in action as six out of the UK’s top ten hiring hotspots were in London this month.
  •           The latest data for vacancies shows continued growth and stability with 194,000 new job adverts posted in early July, giving a total of 1.57 million active job postings in the UK.  The number of vacancies is now above its pre-pandemic level in Jan-March 2020, the first time it has been surpassed in 15 months.
  •           In sharp contrast, candidate shortage is at unprecedented levels with availability reportedly at a 24-year low.  A survey undertaken by KPMG identified that the supply of candidates has fallen for the fourth month in a row, with increased hiring, Brexit, pandemic-related uncertainty and furlough schemes being blamed.
  • The UK employment rate for all people (aged 16 and over) has decreased to 74.8%, 1.8 percentage points lower than before the pandemic, but 0.1 percentage points higher than the previous quarter.
  • The employment market is still showing an increase in recruitment activity for both temporary and permanent billings as employers’ confidence in hiring and investment continues to improve.  With growth in permanent placements being seen consistently over the past four months.
  • The UK unemployment rate for all people (aged 16 and over) was 4.8%, 0.9 percentage points higher than before the pandemic, but 0.2 percentage points lower than the previous quarter.
  • The redundancy rate has continued to decrease to 3.8 per thousand employees on the quarter, similar to pre-pandemic levels.

At the same time, the FT is reporting that across advanced economies there is a mismatch between those out of work and the jobs available.  According to a report by the OECD released earlier this month, low-skilled workers, who were most likely to lose their jobs at the start of the pandemic are ill-prepared to move into sectors where hiring is strongest.  

Commenting on the report, Stefano Scarpetta, Director for Employment, Labour & Social Affairs, of the OECD, said:

“….A widening gap may develop between those who have weathered the crisis through reduced hours and short periods on temporary lay-off, and those who have found themselves jobless — increasingly distant from the labour force, exhausting benefit entitlements and risking long-term scars.  At the beginning of the crisis, low-skilled workers were more likely to lose their jobs. High-skilled workers were more likely to reduce their working time”

The OECD reported there was evidence that many of the jobs hit hardest by the pandemic were already at risk of being replaced by automation before the crisis, and could now disappear as the adoption of digital technologies gathers pace.

Scarpetta said …..“this was evidence that governments should make job retention schemes more targeted to ensure they did not prop up businesses that are unlikely to survive in the open market. Governments should also provide incentives for businesses to create jobs, and steer workers towards sectors that are expanding through hiring subsidies, mobility bonuses and concerted efforts to help adults retrain.”

June 2021 Update

According to the latest employment figures from the ONS:

  •       Following a period of employment growth and low unemployment since the start of the pandemic, employment had generally been decreasing and unemployment increasing. However, the latest estimates (February to April 2021) continue to show signs of recovery. There was a quarterly increase in the employment rate of 0.2 percentage points to 75.2% and a quarterly decrease in the unemployment rate of 0.3 percentage points to 4.7%.
  • The economic inactivity rate was largely unchanged on the previous quarter at 21.0%.
  • March to May 2021 saw quarterly growth in vacancies of 24.0% (146,600) compared with last quarter, with all but one industry increasing their number of vacancies.
  •  The estimated number of vacancies reached its highest level since January to March 2020 (which is a pre-pandemic period), with growth continuing in the most recent quarterly estimates.

 

The ONS job vacancy figures are supported by the latest KPMG and REC, UK Report on Jobs survey. May survey data (collected between May 12-24) highlighted a sharp and accelerated rise in vacancies, with the latest upturn the most marked since January 1998. Substantial increases in demand were signaled for both permanent and temporary staff, with the former seeing the slightly steeper rate of growth.

Neil Carberry, Chief Executive of the REC, said:

Data for the past month shows hiring in the UK recovering to normal levels, though there remain some differences between sectors and local areas. As pandemic restrictions have lifted, we have seen an explosion in job vacancies as companies rush to hire ahead of re-opening”

The survey’s authors say skills and labour shortages, that already existed before the pandemic, are now the most pressing issue in the jobs market.

Kate Shoesmith, deputy chief executive of the Recruitment & Employment Confederation (REC) said:

With the demand spiking, the skills and labour shortages that already existed in the UK have come into sharper focus – and Covid has only made them worse”

May 2021 Update

According to the latest employment figures from the REC and ONS:

  •           The latest data for vacancies shows a record high since the start of the pandemic, with 211,000 new job adverts at the end of April followed by 181,000 new job adverts posted in the first week of May, giving a total of 1.53 million active job adverts in the UK.  This upturn in demand is the quickest rate seen for 23 years!
  •           Unsurprisingly, after stabilising in March, candidate availability fell in April at the sharpest rate since January 2020, linked to uncertainty caused by the pandemic preventing candidates seeking new roles, Brexit, IR35 legislation and furlough.
  • Annual growth in average employee pay continues to strengthen, driven in part by the effects of a fall in the number and proportion of lower-paid employee jobs.
  • The UK employment rate for all people (aged 16 and over) continues to rise at 75.2%, growing to 0.2 percentage points higher than the previous quarter.
  • The start of the second quarter has shown a marked increase in recruitment activity as employers’ confidence in hiring and investment continues to improve, with permanent placements expanding at the sharpest rate since October 1997 and the demand for temporary workers remaining historically strong.
  • The estimated UK unemployment rate for all people (aged 16 and over) was 4.8%, 0.3 percentage points lower than the previous quarter and the third consecutive monthly fall.
  • The redundancy rate decreased by a record 6.9 per thousand on the quarter to 5.50 people per thousand employees.

January to March 2021 estimates show signs of recovery with a quarterly increase in the employment rate, combined with a quarterly decrease in the unemployment rate, partly due to a flow of 132,000 people moving from unemployment to employment.

Commenting on the latest results, Neil Carberry, Chief Executive of the REC, said:

“… The jobs market is improving at one of the fastest rates we have ever seen, and that’s great news.  We are bouncing back from a record low – and many people are still struggling – but the data shows that job creation is firing back again.  This month’s numbers for permanent hiring are the best we have seen since 1997.  Temporary hiring has chalked up its ninth straight month of growth, demonstrating how important temporary agency work is to getting families and businesses back on their feet.”

April 2021 Update

According to the latest employment figures from the ONS:

  •           On a positive note, unemployment for the period December 2020 to February 2021 for all people (aged 16 years and over) dropped unexpectedly to 4.9%; the first quarterly decrease the market has seen since October to December 2019 and the second fall seen consecutively across two months.
  • There are welcome signs of vacancy recovery with data for early March 2021 hitting 181,000 new job adverts, the highest weekly figure since early 2020.  This rise in hiring activity clearly indicates an increase in business confidence as lockdown restrictions are eased, with statistics indicating an acceleration in April.   In contrast, reports suggest the availability of candidates remains stagnant, largely due to concerns around how secure any new employment would be.
  • Redundancy reports show a record decrease on the quarter to 7.3 per thousand, substantially lower than the record high of 14.2 per thousand in the period September to November 2020.
  • March highlighted improved pay trends for both permanent and temporary workers driven by market confidence and an increase in the demand for staff with starting salaries rising for the first time in 2021 to date, with the rate of inflation the fastest seen since December 2019.
  • Employers’ confidence in hiring and investment is improving with data showing that intentions to hire permanent staff remain high with the fastest rise in permanent placements seen since 2015.  March also saw the demand for temporary agency workers significantly increasing from the previous quarter.

With the percentage of UK businesses trading in April increasing to 77%, it’s encouraging to see the job market showing signs of recovery.

Commenting on the latest results, Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK, said:

“… The UK job market is starting to rebound off the back of the Government’s plan to ease national lockdown measures over the coming months, with the highest rise in permanent placements in six years and a sharp increase in temporary billings.

This is good news for businesses, job seekers and the UK economy, but employers are still identifying a big skills gap across sectors including IT, construction and retail, with demand and supply not matching up.

That’s why, as we start to look beyond the pandemic, businesses will be even more crucial in making sure prospective and current employees are adaptable, productive and ready for new challenges.”

March 2021 Update

According to the latest employment figures from the ONS:

  • The UK employment rate dropped by 1.5 percentage points on the previous year to 75.0% and fell by 0.3 percentage points compared with the previous quarter (August-October).
  •          The UK unemployment rate for all people (aged 16 years and over September-November 2020) was 5.0%; this is 1.1 percentage points higher than a year earlier and 0.1 percentage points higher than the previous quarter, though the increase is smaller than in recent periods.
  • The latest data shows vacancy recovery has stalled with an estimated 601,000 vacancies from December-February 2021, this is 26.8% fewer than a year earlier.  However, this is an improvement on the position in summer 2020 when vacancies were down by nearly 60% year on year.
  • Annual growth in average employee pay continues to strengthen, driven in part by the effects of a fall in the number and proportion of lower-paid employee jobs and by increased bonuses, which were postponed from last year.
  • The total number of weekly hours worked was 968.0 million, down 83.1 million hours on the same period the previous year, but up 8.0 million hours compared with the previous quarter.
  • The redundancy rate for the latest quarter was estimated at 11.0 people per thousand employees, however this has decreased by 2.3 thousand on the last quarter, which was a record high.

The good news is that 68,000 more people were in payrolled employment in February 2021, an increase of 0.2%, when compared to January 2021; this is the third consecutive monthly increase. 

Commenting on the latest survey results, Neil Carberry, Chief Executive of the REC, said:

“… The growth in temporary employment shows how important temping is to getting people into work quickly, and helping businesses grow  in unpredictable times.  The economy is well-placed to bounce back as restrictions are lifted – but many people will need support transitioning into the new roles that emerge.”

February 2021 Update

According to the latest employment figures from the ONS (September – November 2020):

  • The UK employment rate dropped by 1.1 percentage points on the previous year to 75.2% and fell by 0.4 percentage points compared with the previous quarter (June-August 2020).
  •          The latest data shows that the economy (GDP) increased by 1.2% in December 2020, following a revised 2.3% decline in November where there were more extensive restrictions to activity.  GDP grew by 1% in Quarter 4 (Oct-Dec), following revised 16.1% growth in Quarter 3 (July-Sept).   
  •          Growth in average total pay (including bonuses) among employees for this period increased to 3.6% and growth in regular pay (excluding bonuses) also increased to 3.5%; this impact is caused by a fall in the number and proportion of lower-paid jobs compared with before the pandemic.
  • In real terms, total pay and regular pay is now growing at a faster rate than inflation, at +2.8%.  Average pay has rebounded from the sharp falls during early summer 2020, with regular pay in November being at a record high.

  • The estimated UK unemployment rate for all people (aged 16 years and over September to November 2020) was 5.0%; this is 1.2 percentage points higher than a year earlier and 0.6 percentage points higher than the previous quarter.   
  •          The proportion of workforce on furlough increased through November 2020, reaching 16% in the period 16-29th November, but it then decreased to 11% between 30th November – 13th December 2020.

 

Permanent placements in January fell after a mild upturn in December, driven by the reintroduction of national lockdown measures, however REC research produced in partnership with KPMG this month showed that temporary recruitment grew in January for the sixth month in a row, whilst growth in short-term vacancies moderated.

Commenting on the latest survey results, Neil Carberry, Chief Executive of the REC, said:

“With the vaccination programme making progress, it’s likely that a path out of the pandemic is emerging.  As that happens, we expect a strong recovery in permanent hiring.”

January 2021 Update

According to the latest employment figures from the ONS (August – October 2020):

  • The UK employment rate dropped by 0.9% percentage points on the previous year to 75.2% and fell by 0.5% percentage points compared with the previous quarter (May-July 2020).
  •          This quarter saw a real term growth in average total pay (including bonuses) among employees. For the three months August to October 2020 average pay increased to 2.7% and growth in regular pay (excluding bonuses) also increased to 2.8%. For total pay, this is the first time that the index has been on positive territory since the three months to March 2020.
  •          The estimated UK unemployment rate for all people (aged 16 years and over August to October 2020) was 4.9%; this is 1.2 percentage points higher than a year earlier and 0.7 percentage points higher than the previous quarter. For context full employment in the UK is considered 5%.
  • Surprisingly, this quarter employment rates increased for women. Estimated employment rates for men are down 1.9% on the previous year. However, the employment rates for women are 0.1% up on the previous year.
  • Business hiring confidence increased as growth has been identified in the vacancy sector with 1.77 million active UK job adverts in December 2020, which is approximately 10.5% more than in December 2019.
  •          Estimates for August to October 2020 show 32.52 million people aged 16 years and over in employment, 280,000 fewer than a year earlier. This was the largest annual decrease since January to March 2010.

However, REC research produced in partnership with KPMG this month showed that total demand for staff has risen for first time in three months, with temporary vacancies rising at a much steeper rate (up by 26% compared to last year) than that seen for permanent workers. It was encouraging to read the comments of Neil Carberry, Chief Executive of the REC:

 

The underlying strength of the British economy shone through in the December jobs figures. The biggest expansion in temporary recruitment since October 2018 shows how important the flexible jobs market is to that performance. Growing permanent placements and starting pay also emphasised the resilience of our economy”.

So whilst the latest employment statistics from the ONS may appear pretty gloomy, we can take encouragement from the most recent REC research and words of James Stewart, Vice Chair at KPMG who said:

 

“… with the UK leading the way on the vaccine roll out and continued government financial support, there is hopefully light at the end of the tunnel for both business and jobseekers.”

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