UK Job Market Report – September 2021
UK Job Market Report for September 2021
The latest Job Market Report for September 2021 has been released and the key findings are that increased hiring activity, and a lack of available candidates has driven up starting salaries across permanent and temporary vacancies in all four regions of the country.
Commenting on the latest survey results, Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK, said:
““This month’s unprecedented increase in starting salaries – the highest in 24 years – is being driven by the near record fall in candidate availability. While higher salaries are good for job seekers, wage growth alone is unlikely to help sustain economic recovery because of limited levers to bring people with the right skills to where the jobs are and increase productivity.
“The sharp rise in hiring activity is a reason to be hopeful, but competition is fierce. The end of the furlough scheme should be bringing tens of thousands of new people to the jobs market, but many do not have the right skills to transfer to the sectors with most demand.
“Reskilling and supporting people to move jobs which are in demand needs to be speeded up. Otherwise we may see these clear tensions in the labour market turning into a workforce crisis in many sectors.”
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.”
Second sharpest increase in permanent placements on record
Due to increased market confidence, and a general increase in economic activity, there has been a continued rise in hiring activity in September. This was only slighly slower than August’s peak, making it the second sharpest rise since the survey began 24 years ago. This was true across all regions with the highest being the North of England and the slowest increase was the Midlands.
Temporary placements also increased, well above average, but the rate of this growth was the slowest seen since April. This is cited to be due to ongoing staff shortages. Growth of temporary billings softened across all four regions apart from the North. Like permanent placements, the softest growth was seen in the Midlands.
Second steepest decline of candidate availability on record
There was a further drop in candidate availability again this month, only slightly softer than August’s record setting figures. This was cited to be due to a greater demand for staff, a high employment rate, fewer EU workers and a lack of confidence among employees to switch roles due to the uncertainty over the on-going pandemic. The decline of candidate availability was felt more for permanent roles, but was still sharp in temporary staff numbers. This contraction of the market was seen across all four regions.
Overall demand for worker rose for the eighth month running.
Although the rate of growth softened again from July’s all time record, dropping to a four month low, it was still felt and was one of the quickest on record. The decrease in staff availability has coincided with a continued steep increase in the demand for permanent and temporary staff. Permanent demand growth was quicker than temporary, but it still increased at one of the quickest rates on record. The demand for both permanent and temporary members of staff was much stronger in the private sector than in the public sector.
The most in demand employees were within the IT & Computing sector, with Hotel & Catering coming a close second. The slowest increase was across Executive/Professional categories, but an increase regardless.
Continued increases in starting pay
Due to a continued increase in demand for staff and a lack of candidates on the market led to a further increase in starting pay. This month, that rate was the fastest since the survey began 24 years ago across both permanent and temporary workers. According to the data collected from the ONS, employee earnings including bonuses rose by 8.3% on annual in the three months to July 2021. This was the second fastest since records began, and only slightly softer than the 8.8% increase in the second quarter. However, the ONS have stated that the pandemic has distorted official pay data, and has led to a fall in the number, and proportion, of lower-paid jobs. Pay growth slipped from +10.2% to +9.6% in the private sector, while public sector earnings growth eased from +2.8% to +2.5%.
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