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UK hiring and job vacancies rise sharply

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UK hiring and job vacancies rise sharply
Recruiters linked staff shortages to 'continued uncertainty around the pandemic, greater demand for staff and Brexit'. Photo: Dan Kitwood/Getty

UK hiring increased sharply in November along with a drop in overall candidate supply, as businesses continue to try and rebuild their workforces following the COVID-19 pandemic, according to the latest KPMG and REC UK report on Jobs survey.

November also saw "further marked increases" in vacancies for both permanent and short-term staff.

The imbalance between the supply and demand for workers led to further increases in starting pay, the survey, compiled by IHS Markit, found.

Companies were on a hiring spree as permanent placements rose at a steeper rate than in October — the fifth-quickest on record.

The strongest rises were seen in the Midlands and London, where the seasonally adjusted index rose for the first time since August. Meanwhile the slowest increase was seen in the South of England.

The capital also recorded the quickest increase in temp billings, clocking the third highest rate of growth since February 2014.

Demand for staff also continued to grow rapidly across the UK in November with job vacancies continuing to rise.

Read more: Workplace trends: predictions for 2022

The number of vacancies for permanent roles in the private sector saw the most growth, with IT & computing seeing the sharpest rise in demand, followed by the hotel and catering sector, with the retail sector experiencing the softest rise. The former also saw the greatest increase in short-term vacancies.

London witnessed a sharp increase in vacancies for permanent jobs, as the rate of vacancy growth ticked up from October. Temporary vacancies in the capital rose at the fastest rate since July 2007, pushing London above the national average.

In Scotland, the rate of growth in permanent vacancies remained among the fastest on record and stronger than the UK average, according to the Royal Bank of Scotland Report on Jobs. Scotland also saw a further rise in demand for temporary staff, with vacancies rising for the fourteenth month running.

There was a marked decline in candidate supply in November as many sectors experienced staff shortages despite rapid hiring.

Recruiters linked this to "continued uncertainty around the pandemic, greater demand for staff and Brexit".

London-based recruiters also pointed to a lack of overseas candidates, particularly in relation to the drop in the number of people looking for temporary work in the capital.

"The pandemic continues to have an impact on the flow of job seekers coming to London from overseas, and has left many businesses with a staff shortage crisis, which risks damaging their growth ambitions," said Anna Purchas, London office senior partner at KPMG UK.

Read more: 1.3 million Londoners prepared to 'quit their job' due to commute

The supply of workers fell the most in the North and South of England.

Permanent candidate availability across Scotland declined for the tenth month in a row while the supply of temporary staff fell for the ninth consecutive month. Scottish recruiters also pointed to COVID and Brexit as reasons for the drop, as well as the UK's IR35 off-payroll working rules.

Low candidate numbers and efforts to attract and secure workers drove further steep increases in pay for both permanent joiners and temporary staff across the UK in November, as employers competed to attract top talent.

The rate of starting salary inflation accelerated to a new high, while temp pay softened only slightly from October's all-time record.

The seasonally adjusted Permanent Salaries Index posted its third-highest reading in more than 24 years of data collection in London in November.

However, the Midlands topped the list of permanent salary inflation. Wages for temporary staff rose the most in the Midlands and the North of England.

Read more: Gender pay gap exposes unequal UK as women earn 40% less than men

The rate of salary inflation for permanent staff in Scotland was the quickest on record, and average hourly pay rates for short-term staff rose for the twelfth consecutive month – skill shortages and a strong demand for staff continued to exert upwards pressure on pay.

“The current trajectory is unsustainable in the long run for businesses and the wider economic recovery. The priority must be to replenish the workforce and ensure businesses can access the talent they need. That means equipping job seekers with the skills that employers and new industries are looking for, increasing labour market flexibility and improving transport links," said Claire Warnes, head of education, skills and productivity at KPMG UK.

Watch: How to negotiate a pay rise

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