Starting salaries at record high, while candidate availability at record low

Recruitment levels for the last 9 months have risen sharply across all business sectors of the UK with permanent staff appointments and temp placements both rising at near-record rates, while the increased demand for staff hit a fresh high when the country saw the easing of COVID-19 restrictions according to the latest UK Report on Jobs survey by KPMG and the REC (Recruitment and Employment Confederation).

The availability of skilled candidates continues to decline, it is reported in the busi

ness chambers of commerce and the open university report** that 72% – Almost three-quarters of organisations saying the impact of these shortages has increased workload on other staff, and 78% are seeing reduced output, profitability, or growth as an overall result.

Pay pressures in July continue to intensify, with starting salaries now rising at the fastest rate in recorded history.

Starting salaries increasing…

Escalating demand for staff and a further marked fall in candidate volumes have led to permanent starting salaries to increase at a much faster 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.

A rise in demand for candidates

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

An obvious decrease in candidate volumes

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.

Upskilling and reskilling are part of the solution

Competition for skilled people is fierce so we can no longer look solely to recruitment to solve all our shortages. It’s critical that employers have the flexible funding, support and quality training provision to tackle this problem head on.

All employees need a much greater focus on support throughout their working lives with access to rapid upskilling and reskilling opportunities.

Key Findings of the Business Barometer 2022 report:

• 68% More than two-thirds of SMEs are currently facing skills shortages, rising to 86% of large organisations
• 72% Almost three-quarters of organisations say the impact of these shortages has increased workload on other staff, while 78% are seeing reduced output, profitability, or growth
• 90% of large organisations have implemented some form of written plan around recruitment, training, addressing skills shortages, ESG, or D&I, compared to only 43% of micro-organisations
• 53% More than half of large organisations will increase investment in staff training over the next year, compared to 47% of SMEs
• The trend towards remote working is enabling 42% of large organisations to attract new staff, compared to only 12% of SMEs

* https://home.kpmg/uk/en/home/media/press-releases/2021/08/kpmg-and-rec–uk-report-on-jobs.html
** https://www.open.ac.uk/business/barometer-2022