KPMG And REC: Permanent Placement Growth Hits Fresh Survey Record In September Across The North
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The latest KPMG and REC, UK Report on Jobs: North of England survey showed permanent staff appointments rising at the fastest rate since data collection began 24 years ago in September, while growth of temp billings also accelerated since August. There remained a remarkably strong appetite for workers, as vacancies grew sharply once again. However, the supply of both permanent and temporary candidates continued to fall sharply, which in turn contributed to the steepest rises in starting salaries and temp wages in the survey history.
We’re unmistakably seeing confidence return to the market in the North as employers once again invest in talent.
The report, which is compiled by IHS Markit, is based on responses to questionnaires sent to around 100 recruitment and employment consultancies in the North of England.
Permanent placement growth hits new survey record
Permanent staff appointments in the North of England increased substantially in September, with the rate of growth accelerating markedly to reach a new survey peak (since October 1997) and surpassed the previous high set in August.
The expansion was the strongest of the four monitored English regions by a notable margin. Meanwhile, the Midlands recorded the softest increase in permanent placements, albeit one that was still marked.
According to surveyed recruiters, more people were placed into permanent roles as a result of higher economic activity.
Recruitment agencies in the North of England signalled another sharp monthly rise in billings received from the employment of temporary staff in September. The rate of increase strengthened from August and was the joint-fastest since May.
There were several reports of strong staff demand as a result of rising workloads. In some cases, contractors were hired while companies looked to fill positions on a permanent basis.
The North of England registered the quickest rate of growth and was the only English region to note an acceleration. The rise in the North was followed by those seen in London, the South of England and Midlands respectively.
Although vacancy growth in the North of England subsided during September, both permanent and temporary staff demand increased at rates which, prior to the last few months, were unprecedented in the context of the survey history (stretching back to October 1997).
The North of England was also the top performing English region, recording the joint-quickest growth rate in permanent job vacancies, level with the South of England, and the sharpest rise in temp job openings by a considerable margin.
Permanent candidate supply falls at steep rate again
Recruitment consultancies in the North of England continued to report a sharp deterioration in the availability of candidates for permanent job roles during September. The latest drop in supply was the second-worst on record, beaten only by that seen in August.
Anecdotal evidence indicated that excess demand for staff had been a key cause of candidate shortages, while some recruiters noted difficulties in enticing workers to leave their current roles.
The supply of temporary workers in the North of England fell sharply in September, as has been the case throughout the past six months.
Recruiters mentioned Brexit, a lack of suitably-skilled candidates (due to many already being in employment), and strong competition for staff as factors weighing on the supply of temp labour.
That said, the rate of deterioration was the least severe for five months. Some panellists suggested that high levels of short-term work helped to attract applicants.
Starting salary inflation reaches unprecedented rate
Starting salaries awarded to permanent new joiners in the North of England increased at another record-breaking rate in September, surpassing August's previous peak.
The unprecedented rate of inflation was overwhelmingly attributed by recruiters to excess demand for permanent staff relative to supply, which generated strong pay pressures as businesses competed for talent.
Across the four monitored English regions, the rise in starting salaries was broad-based, with the North of England reporting the strongest inflation.
Hourly pay rates for short-term staff in the North of England increased substantially in September, and at the fastest pace since data collection began 24 years ago. The source of pay pressures for temp staff was the same as for permanent workers, with an imbalance between demand and supply causing wages to rise to attract skilled workers.
Notably, temporary wages in the North of England increased at a faster rate than those seen across the other three monitored English regions.
Commenting on the latest survey results, Euan West, office senior partner for KPMG in Leeds, said:
“We’re unmistakably seeing confidence return to the market in the North as employers once again invest in talent. Permanent appointments in the region have risen at the fastest rate since data collection began 24 years ago, proving that businesses are ready to turn their focus from resilience to growth, and are seeking out the right talent to help them with that transition.
"We are, though, seeing an imbalance between supply and demand of talent being exacerbated by competition for some skills from London based businesses and beyond, as geographic barriers are lowered due to changes in mindset around remote working. This is likely to be contributing to the North’s sharp wage inflation.”
Data collected September 13-24 Neil Carberry, Chief Executive of the REC, said:
“Demand for workers continued to grow last month, while staff availability fell at a near record pace. Competition for staff has led to the fastest growth in starting salaries since this survey began – not just in logistics and food processing, but in white collar professions as well. But 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. While the current crises will pass, rising input costs and further tax rises would only mean higher prices and lower investment in the medium term. It is essential that government works in partnership with business to deliver sustainable growth and rising wages, rather than a crisis-driven sugar rush. That includes working on policies that encourage business investment, an international outlook and skills development, especially at Levels 1 and 2 where shortages are most acute – this will also help unemployed young people get into work.”