Strengthening demand for staff

The Report on Jobs, published today by the Recruitment & Employment Confederation and Deloitte, provides the most
comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers, as well as data on national newspaper recruitment advertising.

Recruitment consultancies signalled a further strong increase in permanent staff placements and temporary staff billings in January, primarily in response to strengthening demand for staff by employers. However, consultancies also reported that they were finding it increasingly difficult to find candidates with suitable skills and experience, and that this had contributed to a further marked rise in pay rates. Commenting on the latest report, Brett Walsh, Head of UK Human Capital at Deloitte reported that: The latest Report on Jobs survey suggests that strong demand for staff by employers was sustained in January. This again enabled consultancies to place a rising number of candidates in new jobs. However, with fewer redundancies and rising staff appointments, skill shortages amongst available candidates are likely to become increasingly widespread over the coming months. This has already resulted in employers awarding significantly higher salaries to new staff, as the war for talent heats up.

Also commenting on the latest report, Gareth Osborne, Managing Director at REC reported that: This was another strong month for those hiring, with a marked increase in recruitment activity. At the same time, skills shortages and demand for staff are also continuing to grow which further underlines the key role of the recruitment industry in helping organisations to address ongoing resourcing challenges in an extremely competitive labour market.

ïPermanent staff placements and temporary staff billings rise at accelerating rates.

Januaryís Report on Jobs survey pointed to a further marked expansion of recruitment activity in the UK. The number
of people placed in permanent jobs by recruitment consultancies increased for the eighth consecutive month, and at the strongest rate since May 2000. Meanwhile, billings received from the employment of temporary and contract staff also rose for the eighth month running in January, with the rate of growth picking up to the fastest since February 2001.

ïActual employment rises steadily again.

The rising number of permanent staff placements was reflected in an increase in actual private sector staffing levels (as measured by the CIPS/Reuters Employment Index) for the sixth successive month in January. Staffing levels contin-ued to rise across the manufacturing, service and construction sectors during the month. However, although there were strong gains in employment reported by a number of firms, these were offset by increased redundancies in others, as struggling firms again reduced the size of their workforce in an attempt to improve productivity. As a result, the rate of growth of actual employment was again only modest, and in fact eased slightly compared to Decemberís near-three year high.

ïBroad based increase in demand for staff.

Rising staff appointments continued to be supported by strengthened demand for staff by employers, which increased
for the seventh month in a row in January. Furthermore, the rate of expansion of demand for staff signalled by the Re-port on Jobs Vacancies Index picked up slightly compared to December. Consultancies reported that demand for all main types of employee was significantly higher than a month earlier, but was the strongest amongst permanent cate-gories for Executive/Professional staff and temporary categories for Engineering/Construction staff.

ïCandidate availability continues to decline... The overall availability of candidates to fill vacant positions at employers fell for the third consecutive month in January, with the rate of deterioration the fastest since April 2001. Skill shortages were reported to have become increasingly widespread during the month.

ï...resulting in a marked increase in pay rates.

Strong demand for staff and rising skill shortages amongst available candidates were reported by consultancies to
have resulted in a further marked increase in pay rates in January. Permanent staff salaries rose for the sixth month
running, and at the fastest rate since May 2001. Meanwhile, temporary staff pay rates increased at a similarly robust
rate to that recorded in the final quarter of 2003