“What’s the job market like?”: December 2021 KPMG & REC UK Report on Jobs
The latest KPMG & REC UK REPORT ON JOBS has just been published featuring survey results from November 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 continues to expand strongly amid robust demand for workers. Vacancy growth slips to six-month low, but remains robust overall
- Starting salary inflation hits fresh high
- Candidate availability drops at slightly softer rate
- ONS data shows vacancies still growing, at an all-time high and 45% higher than pre-pandemic levels
- “Executive and Professional” category registering weaker increases albeit still buoyant.
Permanent placements remained high in November and at the highest levels since the survey began 24 years ago.
Sharp and accelerated rises in permanent placements were seen across all four monitored English regions in November. The Midlands and London posted the joint-strongest increases, while the slowest upturn was seen in the South of England.
Looking at the data in more detail reveals IT & Computing posted the steepest increase in demand for permanent staff during November, followed closely by Hotel & Catering. The softest rise in permanent vacancies was seen in the Retail sector, followed by Construction and Executive & Professional.
There was a fall in the supply of permanent candidates for the tenth month running in November. The rate of reduction was the softest seen since May but remained substantial overall. Over six times as many panellists noted lower availability of permanent staff (49%) compared to those that saw an increase (8%), with many blaming the fall on continued uncertainty relating to the pandemic and the economy, robust demand for workers and Brexit.
Softer falls in permanent candidate supply were seen across all four monitored English regions
There was also further reference to a lack of confidence among potential candidates over whether it was wise to switch jobs given the continued economic uncertainty.
All four monitored English regions saw permanent placements increase steeply, with London and the Midlands seeing the joint fastest expansions.
Steep reductions in permanent candidate numbers were seen across all four monitored English regions, with the sharpest fall in the North of England.
Sustained rises in demand for staff coupled with falling candidate numbers resulted in a record increase in starting salaries for permanent staff in the UK in November, surpassing the previous record set in October. All four English regions saw permanent salaries rise at substantial rates, with the Midlands and the South of England reporting series record upturns in the latest survey period.
Latest official data from the Office for National Statistics (ONS) showed a sustained increase in job vacancies across the UK in the three months to October.
The overall number of vacancies increased from 1,108,000 to 1,172,000 in the latest three-month period, to signal by far the highest level of vacancies since the series began. This represented an +117.8% increase in roles compared to a year ago, and was +45% higher than the pre-pandemic level of 811,00 in the three months to February 2020.
The CIPD “Labour Market Outlook” states that employment confidence remains high. The net employment intentions figure, which measures the difference between the proportion of employers expecting to add jobs and those planning to cut them, has risen for the fifth consecutive quarter to +38, up from +32 last quarter.
However, recruitment difficulties are increasing at the same time with almost half (47%) of employers are reporting hard-to-fill vacancies, rising from 39% in the last report. The challenge is particularly tough when filling low-skilled vacancies, as the median number of applicants for these roles has dropped from 20 to 16.
In response, employers have adopted a variety of tactics in a bid to combat recruitment difficulties. Almost half (47%) have raised wages over the past six months to help offset hard-to-fill vacancies. Other popular tactics include upskilling existing staff (44%), hiring more apprentices (27%) and improving job quality (20%).
A more nuanced view?
As mentioned previously, back in September 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:
“The confidence of businesses to hire remains reassuringly robust. We’ve seen nine months of growth in permanent placements and rising vacancies for the past 10 months as the economy bounces back. The data points to a strong end to the year, but that hunger to expand could be tested as the jobs market becomes ever tighter. The pace of demand for workers is running far faster than supply can keep up with, which is draining an already diminished pool of available talent and feeding into inflationary pressures.
The current trajectory is unsustainable in the long run for businesses and the wider economic recovery”
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.