Labour Market Outlook – July 2021

Jobs Outlook

August 12, 2021

Key Analysis

  1. Supply of workers plummets, driving stronger increase in starting pay
  2. Permanent placements and temporary recruitment both rise rapidly
  3. Vacancies expand at record pace

The main findings for July are:

Further marked upturn in recruitment activity

Robust demand for staff and the further rollback of pandemic restrictions led to a sharp increase in the number of people placed into permanent job roles in July, with growth easing only slightly from June’s all-time record.

Temporary recruitment meanwhile expanded at the quickest rate since June 1998.

Starting salaries increase at quickest pace on record…

Rising demand for staff and a further marked drop in candidate supply led permanent starting salaries to increase at a quicker pace.

Notably, the rate of salary inflation was the sharpest seen in nearly 24 years of data collection. Moreover, temporary/contract staff hourly pay rates rose at the second-quickest rate since the survey began.

Latest vacancy data indicated faster increases in demand for both permanent and temporary workers in July. Growth of demand for permanent staff hit a fresh series record, while the upturn in temporary vacancies was the steepest since November 1997.

…and a significant drop in candidate supply

Ongoing uncertainty stemming from the pandemic and concerns over job security contributed to another severe drop in candidate availability in July. Brexit was also cited as a key factor reducing the supply of workers, particularly temporary staff. Overall, candidate numbers fell at the second-sharpest rate in the survey history, easing only slightly from June’s record.

OFFICIAL DATA: UK JOB VACANCIES

Data from the Office for National Statistics (ONS) indicated continued robust growth of job vacancies in the three months to June. Overall, vacancies more than doubled from the same period a year ago (up +153.5%) as the economy continued to recover from the pandemic. This followed a +60.6% increase in the preceding three-month period and was by far the quickest rate of growth on record. At 862,000, the number of vacancies was the highest seen since the three months to October 2018.

OFFICIAL DATA: UK AVERAGE WEEKLY EARNINGS

Data from the Office for National Statistics (ONS) showed that employee earnings (including bonuses) rose +7.3% on an annual basis in the three months to May 2021. This was an acceleration

from +5.7% in the preceding three-month period and marked the steepest rate of growth in the series history. However, the ONS have stated this is largely driven by a compositional effect of a fall in the number and proportion of lower-paid employee jobs since the onset of the pandemic, and a comparison against a low base period. Earnings growth improved to +8.1% in the private sector, but softened to +3.9% in the public sector.

Source: KPMG & REC UK Report on Jobs