Labour Market Outlook – October 2021
November 11, 2021
The key findings from the October report are:
Permanent placement growth eases but remains sharp
October data signalled a further strong rise in recruitment activity across the UK, with both permanent placements and temp billings rising steeply. That said, the rates of expansion were the softest seen for six months, as a number of recruiters mentioned that candidate shortages had weighed on their ability to fill roles.
Candidate shortages remain severe
The overall availability of staff declined again at the start of the fourth quarter. The rate of deterioration eased further from August’s all-time record but was nonetheless the fifth-sharpest seen since the survey began in October 1997. Reduced candidate availability was often linked to a combination of high demand for staff, general labour shortages, fewer foreign workers and hesitancy among employees to switch or seek out new roles.
Growth of demand for staff softens only slightly
Although growth of demand for staff slipped to a five-month low in October, it remained substantial overall and much quicker than the series average. Slower, but still strong, increases in vacancies were signalled for both permanent and temporary roles.
Starting pay inflation accelerates again in October
A combination of candidate scarcity and robust demand for staff added further upward pressure on rates of starting pay. Notably, both starting salaries and temp wages increased at the quickest rates seen in over 24 years of data collection, as companies offered higher pay to attract and secure staff.
Data from the Office for National Statistics (ONS) indicated a further marked rise in total job vacancies across the UK over the third quarter of 2021.
At 1,102,000, the number of vacancies was up from 1,036,000 in the three months to August to post a fresh series record. Notably, vacancies have more than doubled compared to the same period in 2020 (up +117.4%). The figure was also up considerably from a pre-pandemic level of 811,00 in the three months to February.
October survey data signalled a ninth successive monthly rise in overall demand for staff across the UK. The rate of vacancy growth remained substantial and among the fastest on record, despite slipping to the lowest for five months.
The seasonally adjusted Permanent Staff Availability Index signalled a decline in permanent candidate numbers for the ninth consecutive month in October. Recruiters often mentioned that strong demand for workers had depleted supply. There were also reports that some people lacked the confidence to change or seek out new roles due to the ongoing pandemic, concerns over job security and also on a reduced pool of foreign workers, often due to Brexit.
Temp pay inflation accelerates again in October
Hourly rates of pay for staff in temporary/contract employment rose further at the start of the fourth quarter. The rate of inflation was unprecedented in the survey’s more than 24-year history, having accelerated in each of the past seven months. Anecdotal evidence frequently linked pay growth to limited candidate availability, strong demand for workers, and efforts to entice applicants.
Source: KPMG and REC, UK Report on Jobs