Labour Market Outlook – September 2021
October 11, 2021
Starting pay inflation at record high as candidate availability continues to plummet
Data from the Office for National Statistics (ONS) showed that overall job vacancies across the UK hit a fresh record high in the three months to August. The number of vacancies stood at 1,034,000, up from 959,000 in the preceding three-month period, and marked the first time that vacancies had exceeded 1 million. The figure was also considerably higher than that seen over the same period last year (+137.7%).
Overall demand for workers rose for the eighth month running in September. Although the rate of growth softened further from July’s all-time record, it remained substantial and among the quickest ever recorded by the survey.
IT & Computing employees were the most in-demand type of permanent staff in September, just ahead of Hotel & Catering. Executive/Professional workers registered the slowest increase in vacancies, albeit growth was still sharp overall.
The availability of candidates to fill permanent roles fell further in September. Moreover, the rate of deterioration was the second-quickest seen in 24 years of data collection, having eased only slightly from August’s record. Low candidate supply was attributed to high demand for staff, fewer EU workers, a lack of confidence among employees over whether to switch roles amid the pandemic, and a general shortage of skills.
The rate of growth of permanent starting salaries accelerated again in September, to hit a fresh series record for the third month in a row. Greater salaries were frequently attributed to increased competition for workers and efforts to entice applicants, while there were also reports of candidates successfully negotiating higher pay. Data from the Office for National Statistics (ONS) indicated that employee earnings (including bonuses) rose +8.3% on an annual basis in the three months to July 2021.
Neil Carberry, Chief Executive of the REC, said: “Demand for workers continued to grow last month, while staff availability fell at a near record pace. Competition for staff has led to the fastest growth in starting salaries since this survey began – not just in logistics and food processing, but in white collar professions as well. But we have all seen how labour shortages have affected our everyday lives over the past few weeks, whether that’s an empty petrol station or fewer goods on supermarket shelves.
“The scale of the shortages we are seeing cannot be explained by one factor alone, but are a major challenge to businesses’ ability to drive the prosperity of the UK in the months and years to come – supporting families and paying the taxes that fund public services. While the current crises will pass, rising input costs and further tax rises would only mean higher prices and lower investment in the medium term. It is essential that government works in partnership with business to deliver sustainable growth and rising wages, rather than a crisis-driven sugar rush. That includes working on policies that encourage business investment, an international outlook and skills development, especially at Levels 1 and 2 where shortages are most acute – this will also help unemployed young people get into work.”
Source: KPMG & REC UK Report on Jobs