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), KPMG and the Office for National Statistics (ONS). We hope you find it informative and a source of valuable information.
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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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