Transferable Skills and a Lack of Training Are Holding Back Hiring
Since Covid restrictions were lifted, we have seen the number of available vacancies continue to rise throughout the UK, although there was a slight softening in the rate of expansion in October. Whilst this continued growth in jobs is welcomed, candidate availability is still hampering the recruitment process for businesses, with many candidates questioning whether their transferable skills will be valued in other sectors.
Permanent and Temporary Placement Growth
The seasonally adjusted Permanent Placements Index remained well above the neutral 50.0 level in October, signalling a further rapid increase in permanent staff appointments. However, the rate of expansion softened from August’s all-time record and was the slowest recorded for six months. The rate of increase in London softened slightly from 72.1 in September to 68.6 in October, but the region is still fairing better than both the North and South of the UK.
There was an increase in temp billings for the fifteenth month in a row during October, although again, the rate of growth was the softest seen since April. An increase in business activity at new and existing clients has created a robust demand for workers and the North of England posted the sharpest rise in temp billings of all the four monitored English regions.
Vacancy Growth Slows
The October survey data showed a ninth successive monthly rise in overall demand for staff across the UK. Despite slipping to the lowest level for five months, the rate of vacancy growth remained substantial and among the fastest on record.
Permanent staff demand continued to rise more strongly than for temporary workers, with the steepest increase in demand seen for permanent staff in the private sector. Data from the Office for National Statistics (ONS) indicated a further marked rise in total job vacancies across the UK over the third quarter of 2021. At 1,102,000, the number of vacancies was up from 1,036,000 in the three months to August, with vacancies having more than doubled compared to the same period in 2020.
Which Sectors are Hiring?
Demand for permanent workers rose across all ten monitored job categories at the start of the fourth quarter. Hotel & Catering saw the steepest increase in demand for permanent staff, followed closely by IT & Computing, Accounting/Financial roles and Blue Collar vacancies.
Nursing/Medical/Care topped the rankings for temporary staff demand in October but the pattern for demand remained consistent across both permanent and temporary vacancies.
Permanent Candidate Numbers Continue to Decline
At 27.5 in October, the seasonally adjusted Total Staff Availability Index rose from 25.3 in September indicating a softer, but still rapid fall in the overall availability of candidates. The rate of decline was the fifth-sharpest seen since data collection began more than 24 years ago, exceeded only by those recorded in the prior four months.
Strong demand for workers has depleted supply and people lack the confidence to change or seek out new roles due to the ongoing pandemic and concerns over job security.
What Does This Mean for Starting Salaries?
Yet another rapid and accelerated rise in starting salaries awarded to newly-joined permanent workers in October was observed with the rate of increase hitting a new series record for the fourth month in a row. Greater competition for scarce staff is pushing up pay throughout all regions in the UK, data which is backed up from the Office for National Statistics (ONS) showing that employee earnings (including bonuses) increased +7.2% year-on-year in the three months to August.
Despite growing concerns over rising inflation, overstretched supply chains, labour shortages and a rise in COVID-19 cases, businesses remain optimistic in their future hiring intentions. The economy has had a stronger recovery than was expected six months ago, and it is now expected to return to pre-pandemic levels in early 2022.