October 2021 job market report

“What’s the job market like?”: October 2021 KPMG & REC UK Report on Jobs

The latest KPMG & REC UK REPORT ON JOBS has just been published featuring survey results from September 2021.

The full report is posted here and it echoes a number of other recent surveys which point to a 180 degree reversal in the job market since 2020/early 2021, which is now characterised by a huge increase in demand for staff, skill shortages and poor candidate availability.

This accords with Prism’s experience of the market in recent months and is borne out by our discussions with employers and other recruiters.

Key findings are:

  • Hiring activity rises sharply with robust demand for staff
  • Increases in starting pay/salaries
  • Candidate supply falls at “near record pace”
  • ONS data shows vacancies at an all time high and 30% higher than the last peak in 2019
  • “Executive and Professional” category however registering the slowest increase albeit still a sharp rise

There was further sharp rise in permanent placements in September at a rate only slightly lower than August’s all-time record and the second highest since the survey began 24 years ago.

Regional data suggested the North saw the steepest increase while the slowest upturn was in the Midlands. London performed strongly.

Looking at the data in more detail reveals that IT/Computing, Hotel & Catering and Engineering are in strong demand. Executive /Professional performed weakest in both the Permanent and Contract surveys.

The availability of staff for permanent roles “continued to plummet in September” and with a rate of decline only slightly behind August’s record. Survey respondents attributed low supply to high demand of course but also specifically mentioned fewer EU workers.

As a further twist there was also reference to a lack of confidence among potential candidates over whether it was wise to switch jobs given the continued economic uncertainty.

Regional snapshot

At the regional level, the rise in vacancies was broad-based and led by the North of England. The Midlands recorded the softest increase in permanent placements, albeit one that was still marked.

Across the UK there was another decrease in the availability of permanent candidates during September. The latest fall was the eighth in a row, though the rate of decline eased from August’s record. Each of the four monitored English regions saw permanent staff supply fall in September, with the North and South of England recording the joint-sharpest reductions.

Across the four regions, the rise in starting salaries was broad-based, with the North of England reporting the strongest inflation.

ONS Data

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.

A more nuanced view?

Some will be reading this with a sense of incredulity as it references an experience of the job market far from their own.

A report from the Institute for Fiscal Studies (IFS) (with a more digestible but predictably Guardian slant here) says job opportunities remain below pre-pandemic levels for a quarter of the UK workforce, with more slack in the labour market than official estimates show.

New job openings had risen by about 20% above pre-pandemic levels by June of this year, according to the think tank, but with the surge in vacancies being driven by low-paying occupations. IFS economists wrote. “The handful of high-profile labour shortage occupations – while real and causing problems for the supply of certain goods – should not mislead us into thinking that worker power is back.”

Opportunities in higher-paid service occupations had been slower to recover, the IFS said, especially those often taken by women and graduates, with vacancies for more than 8 million workers still at least 10% below pre-pandemic levels. “Because the new economy does not yet look much like a restored version of the old, the kinds of jobs being advertised are different from the mix of jobs available pre-pandemic,” the report said. “This means that . . . many workers will not recognise the relatively buoyant overall picture.”

Commenting on the latest national survey results, Claire Warnes, Lead Partner at KPMG, 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:

“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.”

Methodology. The KPMG and REC UK Report on Jobs is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

For more information on the job market, or to discuss your hiring or career plans please contact Chris Sale, Managing Director, Prism Executive Recruitment via [email protected]

Subscribe to our blog

Enter your email address to subscribe to this blog and receive notifications of new posts by email.