Starting pay soars as candidate supply falls

Employers are hiring -- and with a shortage of candidates for many roles, there has been a record rise in the pay offered to new employees.

The latest Report on Jobs from KPMG and the Recruitment & Employment Confederation (REC) shows that recruitment activity continued to rise rapidly across the UK at the end of the third quarter, fuelled by robust demand for staff and increased economic activity.

At the same time, a near-record fall in candidate availability drove substantial increases in starting pay. In fact, both permanent starters' salaries and temp wages rose at the fastest rates seen in the 24 years since the data was first collected.

The report is compiled by IHS Markit from responses to questionnaires sent to around 400 UK recruitment and employment consultancies.

A deeper dive into the figures shows that permanent staff appointments in September grew at a pace that was only slightly slower than August's all-time record, while temp billings growth edged down to a five-month low but remained strong.

The upturn in recruitment over the month coincided with further steep increases in demand for both permanent and temporary staff, with overall vacancies rising at one of the quickest rates on record.

However, the September survey data also showed a further substantial drop in the availability of staff, with the rate of deterioration easing only slightly from the previous month's record. Recruiters indicated that greater demand for staff, a generally high employment rate, fewer EU workers and a lack of confidence among employees to switch roles due to the pandemic had all contributed to the latest decline in candidate numbers.

IT & Computing employees were the most in-demand type of permanent staff in September, just ahead of Hotel & Catering. Executive/Professional workers registered the slowest increase in vacancies.

When it comes to temporary roles, the Hotel & Catering sector continued to see the steepest increase in demand for staff, while Executive/Professional saw the slowest rise in vacancies.

"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," said Neil Carberry, chief executive of the REC.

"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."

"The end of the furlough scheme should be bringing tens of thousands of new people to the jobs market, but many do not have the right skills to transfer to the sectors with most demand," added Claire Warnes, head of Education, Skills and Productivity at KPMG UK.

"Reskilling and supporting people to move jobs which are in demand needs to be speeded up. Otherwise we may see these clear tensions in the labour market turning into a workforce crisis in many sectors."