Recruitment woes will mean wages must rise
WAGES are rising as employers struggle to hire staff in the South West, a new report reveals.
The latest KPMG and REC, UK Report on Jobs: South of England survey highlighted the sharpest increases in permanent and temporary job creation since mid2014, amid a substantial rise in overall demand for workers.
The study found that recruitment activity increased sharply as pandemic restrictions ease, there were more job vacancies, and a marked fall in candidate supply is driving up starting rates of pay, with employers advised to take on raw recruits and train them up.
Recruitment consultancies in the South West registered a sharper increase in hiring activity in April this year as clients prepared for more normal business conditions amid an easing of pandemic-related restrictions, the study found.
At the same time, concerns over job security, the ongoing furlough scheme, Brexit and IR35 tax and national insurance legislation all weighed on candidate availability, which fell markedly overall.
Rising demand for workers and low supply led to stronger increases in starting pay for both permanent and temporary staff.
Ian Brokenshire, senior partner for KPMG in Plymouth, said: “What a difference a month makes. Confidence is officially restored among the region’s businesses and April saw the sharpest increase in permanent placements and temp billings since mid-2014.
“This optimism looks set to stay as our local businesses hire for a busy year ahead. I would urge those who have lost jobs during the pandemic to look at the local jobs market and consider a new career in a different sector. Businesses would do well to offer training and up-skilling to industry newcomers as part of their hiring process,” Mr Brokenshire added.
The seasonally adjusted Permanent Placements Index signalled a second successive monthly increase in the number of people placed into permanent positions across the region in April. The rate of expansion was the sharpest recorded since August, 2014.
According to panellists, an easing of lockdown measures and improved market confidence had driven the latest upturn in permanent jobs.
Billings received from employment of temporary workers also rose further across the South West at the start of the second quarter. Recruitment consultants linked the increase to stronger business activity and firmer demand for staff. Growth accelerated to the sharpest since July 2014.
April survey data also signalled a sharp rise in permanent vacancies across the South West – the quickest recorded since July 2014. Recruitment consultancies also saw an accelerated upturn in shortterm vacancies.
They also signalled a second successive monthly drop in the availability of permanent staff. Lower candidate numbers were often linked to pandemic-related uncertainty, concerns over job security and the furlough scheme.
There was also a sharper drop in the supply of temporary workers across the South West, with availability dampened by Brexit, IR35 legislation and workers who were on, or recalled, from furlough.
This meant lower candidate supply and skill shortages added further upward pressure on starting salaries, according to recruiters.
Salaries rose markedly overall, with the rate of inflation hitting a 14-month high. Short-term pay continued to rise across the region, stretching the period of wage inflation to five months.
Panel members indicated that a drop in candidate availability and IR35 legislation drove the latest increase in temp pay.
The KPMG and REC, UK Report on Jobs: South of England is compiled by IHS Markit from responses to questionnaires sent to about 150 recruitment and employment consultancies.