- Growth of staff appointments held back by skill shortages
- Temp billings rise at slowest rate in over two years
- Salary growth remains strong, despite easing to 18-month low
Summary:
The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs – published today – provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies.
Slower growth of staff appointments…
Permanent staff placements continued to rise in July, but the rate of growth eased further from April’s recent high to the slowest in over two years. Similarly, temporary/contract staff billings increased at the least marked pace in 25 months.
…as candidate shortages bite…
The availability of staff for permanent roles fell further in July, with the rate of decline accelerating to the sharpest since November 2014. Temporary/contract staff availability also decreased, although the rate of deterioration eased to the slowest in five months.
…and demand for staff softens
Overall vacancy levels increased at the slowest rate in two years during July. Rates of expansion eased for both permanent and temporary/contract staff.
Permanent salary inflation eases
Although starting salaries for permanent hires continued to rise in July, the rate of increase moderated further from April’s recent peak to an 18-month low. However, temporary/contract staff pay growth quickened to the fastest since April.
Regional and sector variation
All four English regions posted increased permanent placements in the latest survey period. The strongest growth was signalled in the Midlands, while the South saw the slowest rise.
As was the case for permanent appointments, Midlands-based agencies registered the fastest growth of temp billings in July, with the slowest increase seen in the South.
Private sector vacancies continued to post the fastest expansion in July, although growth eased since June. Public sector roles increased at an accelerated pace.
Engineering employees were the most sought-after type of permanent staff in July, closely followed by Construction workers. The slowest growth was signalled for Hotel & Catering staff.
Construction led a broad-based rise in demand for temporary/contract staff in July. Nursing/Medical/ Care was in second place. Executive/Professional posted the slowest (albeit still marked) rate of expansion.
Comments:
REC chief executive Kevin Green, says:
“While demand for staff remains strong, the labour market is tightening. Alongside long-term problem areas such as technology and engineering, we’re now seeing vacancies such as bricklayers and drivers being flagged as hard to fill.
“The shortage of construction workers is a particular concern. If construction companies don’t have the people they need, both infrastructure projects and house building will be constrained, and this will have an impact on wider economic growth.
“As students wait in anticipation of A-level results next week, the focus for business and government has to be on making sure that people entering the workforce have the best opportunities to succeed. Businesses need to be prepared to hire staff with potential and invest in their development. We need the government to provide more effective careers advice and encourage people to study the right subjects. And while these changes are feeding through into the jobs market, we need a sensible and balanced approach to immigration so that employers have access to the workers they need.”
Bernard Brown, Partner at KPMG, comments:
“It is clear we are in the grip of an industry wide skills shortage, which shows no signs of abating. Businesses are struggling to find the talent they need and this will have long term implications for their growth plans and potentially impact the wider performance of the UK’s economy. In July over two fifths of recruiters reported a fall in the number of people looking for work, the steepest decline seen in eight months.
“The construction industry in particular is struggling to keep pace with demand, with businesses heavily recruiting both permanent and temporary workers. This is driving significant pay growth in the sector of almost 5%, outstripping Britain’s surging services industry which in comparison saw pay increases of just over 3%.
“The risk is that a shortage of skilled labour in this sector could impede Britain’s major building projects and put the brakes on the country’s real estate market.
“The likelihood is we will see no immediate improvement to this situation. We are already seeing hints of a slowdown, with the loss of growth momentum in housebuilding and civil engineering in July.”