UK Job Market Report – May
UK Job Market Report for May 2021
Main Findings:
This month the job market report for May 2021 has found the following: Temp billings expand at fastest rate since June 1998 and the easing of national lockdown measures and brighter outlook for the economy led to a further marked increase in recruitment activity at the start of the second quarter. Permanent placements expanded at the sharpest rate since October 1997, when the survey first began, while temp billings growth remained historically strong.
KEY FINDINGS OF THE UK JOB MARKET APRIL REPORT
- Hiring activity rises rapidly as COVID-19 restrictions ease further
- Vacancies increase at quickest rate for over 23 years
- Downturn in candidate availability intensifies
Commenting on the latest survey results, Ian Brokenshire, Senior Partner for KPMG in the South West, said:
“No one could have predicted six months ago that we’d be seeing activity in the temporary billings space that has been unseen for over 20 years.
“The return to a more normal way of life has also prompted the impressive increase in permanent placements. However, this may be hindered in the coming months
by lack of available candidates, particularly as many of our overseas workers have now returned home. That said, we may see renewed confidence among potential local job hunters who see now as a good time to change roles, after putting plans on ice for a year.”
Kate Shoesmith, Deputy CEO of the REC, said:
“We now have a consistent picture over the past few months to show that confidence is growing and hiring plans are in motion. The data is mirroring exactly what recruiters tell us daily. In the South, permanent placements are growing at the fastest pace since 2014, and temp billings at the quickest for 23 years.
“So now is the time for action. With 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. This is the most pressing issue in the jobs market right now, and has the potential to slow down the recovery. Employers must think about how they can attract the staff they need, for example by looking at the wage and benefits package on offer – there is particular demand for more flexible and hybrid work. But government also needs to urgently look at improving access to work and opportunities for everyone to participate in training that will lead to a job. This should start with careers information that signals where job openings are being created and funding for the relevant work-related training.”
STAFF APPOINTMENTS
Substantial rise in permanent staff appointments
Recruitment consultants in the South of England signalled a third consecutive monthly rise in permanent staff appointments during May. Notably, the rate of growth was the steepest recorded since August 2014. Panel members generally linked the upturn to increased business activity and stronger market confidence following the recent easing of COVID-19 restrictions.
At the national level, permanent placements also rose rapidly, and at a slightly faster pace than seen in the South of England.
Sharpest increase in temp billings since June 1998
Latest survey data indicated a further acceleration in the rate of growth in temp billings during May. Furthermore, the respective seasonally adjusted index pointed to the quickest upturn for nearly
23 years, with the expansion also exceeding the UK-wide trend. Anecdotal evidence linked the rise to stronger demand for workers amid an easing of lockdown measures and the return to more normal business conditions.
STAFF AVAILABILITY
Supply of permanent staff declines rapidly in May
The availability of permanent workers in the South of England deteriorated for the third month running in May. The rate of decline accelerated notably since April, and was the most severe since June 2017. The fall was also quicker than the UK-wide trend. According to panellists, concerns over changing roles amid the pandemic, skills shortages, fewer EU workers and the furlough scheme had all reduced the pool of available workers.
Record fall in availability of temp workers
The seasonally adjusted Temporary Staff Availability Index fell sharply lower in May, to signal the quickest drop in short-term candidate supply in the South of England on record. The deterioration was also faster than that seen across the UK as a whole. When explaining the latest drop in temp staff numbers, recruiters often commented on Brexit, pandemic-related uncertainty, IR35 legislation and workers on furlough.
PAY PRESSURES
Starting salary inflation hits two- and-a-half-year high in May
Salaries for newly-placed permanent staff in the South of England rose for the third successive month in May. The rate of inflation accelerated since April and was the sharpest recorded since November 2018. The increase was also slightly faster than the UK-wide trend. Recruiters generally attributed the latest rise in starting salaries to lower candidate supply and greater competition for workers.
Sharpest increase in temp wages for two years
The rate of temp wage inflation picked up across the South of England for the fourth month running in May. Notably, the increase in average hourly pay was the quickest seen since May 2019, with
a number of recruiters commenting that temp wages rose in order to attract scarce candidates. Pay for short-term staff also rose at the UK level, albeit at a weaker pace than that seen in the South of England.
Sources: Thanks as always to IHS Markit, KPMG and REC for the data provided for our UK Job Market Report for January.
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