Market update: Salary inflation hits 31 month record!

Key Points

  • Strong rise in recruitment
  • Starting salary inflation hits 31-month record alongside lack of candidate availability;
  • Growth of demand for candidates declines slightly but still remains high.

Sharp Increase in Permanent Placements

Permanent placements have continued to rise each month for the past year-and-a-half. This growth has been linked to a greater demand for staff, although some panellists suggest that improved decision-making has also been a factor.

Increase in vacancies:

Overall demand has continued to rise in January.

Availability of Permanent Staff:

The number of available permanent candidates has continued to deteriorate in 2018. Key permanent staff skills reported in short supply includes paraplanners.

Higher Starting Salary Inflation:

Starting salaries for successful permanent candidates has increased at the fastest pace for over two-and-a-half years.

UK Unemployment Rate in Context:

The UK employment rate is at a four-decade low of 4.3% which is below the EU jobless rate of 7.3%. The jobless rates are higher in Austria (5.4%) and the Netherlands (4.4%), but lower in the US (4.1%), Germany (3.6%) and Japan (2.7%) in comparison to the UK.

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Recruitment news Jan 2018 – Permanent recruitment continues to rise at an increasing pace

Key Points from the December Survey:

  • Permanent placements continue to rise at an increasing pace;
  • Pay inflation remains high alongside a further decrease in candidate availability;
  • Demand for staff softens but remains historically strong.

Permanent Placements

Permanent staff placements have increased at the quickest pace since August. This has resulted in a higher number of people placed in permanent job roles for the seventeenth month running in December.  Key permanent staff skills reported to be in short supply esp paraplanners but also in construction and engineering.

Staff Availability

There has been an accelerated and steep drop in permanent candidate numbers. The rate of deterioration is the fastest recorded over the past two years.

Permanent Salaries

The trend of higher starting salaries for permanent jobs has continued into December. Although the pace of inflation softened for the third month in a row, growth remained sharp overall.

Demand for Staff

Although there has been an easing in the rate of expansion of demand for staff, the rate of growth has remained sharp and above the series average.

Employment

Latest statistics reveal that 32.08 million people were in work in the three months to October. Although this was 56,000 fewer than in the prior three months, this showed an increase of 325,000 compared to the same period in 2016.

Commentary: The number of people finding jobs via recruiters is growing, even while the overall employment rate is plateauing. This suggests that more employers are turning to recruiters to help them fill vacancies as candidate availability continues to fall and recruiting good people becomes that much harder. As a response to these candidate shortages are offering increased starting salaries to attract staff but while this has been the case for some time it isn’t translating into significant wage growth across the economy yet.

Early in the New Year, people often think about changing jobs, so employers are going to have to think carefully about how they can both retain existing capabilities and find the new hires they need as competition for people intensifies. Bosses should consider going to wider talent pools and to be inventive about how to improve their employer brand and make themselves an even more attractive place to work.

 

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Report on Jobs: South (ex London) – March 2016

Key points from February survey:

  • Slower demand growth and less marked drop in supply of permanent candidates…
  • …results in weakest rise in salaries for new starters since October 2014
  • Growth in temp billings remains relatively subdued

Staff Appointment:  Growth of permanent placements remains below 2015 trend

Recruitment agencies in the South of England reported a further rise in full-time appointments in February. The rate of growth remained above the long-run survey average, and was strong overall. That said, it remained slower than the trend pace set in 2015.

Staff Availability:  Drop in supply of permanent candidates slows

The availability of labour for permanent roles in the South fell for the thirty-second consecutive month in February. The pace of decline remained strong overall, and was faster than the UK average. That said, it was the slowest since January 2015 and the second-weakest in over two years.

Pay Pressures:  Permanent salaries

Recruitment agencies in the South reported a further marked rise in salaries awarded to new permanent staff in February.  The rate of inflation remained stronger than the long-run survey average, but slowed for the third successive month to the weakest since October 2014.

Regional Comparisons: 

Staff appointments

February saw a further broad-based increase in permanent staff appointments in the UK, as all four monitored regions posted growth. Moreover, rates of expansion accelerated in all cases. The strongest upturn was, once again, seen in the Midlands and the weakest in London.

Candidate availability

Permanent candidate numbers fell across the four monitored English regions in February, the thirty-second successive month in which this has been the case. The quickest rate of deterioration was noted in the Midlands and the slowest, although still sharp, in London.

Pay Pressures

Permanent salaries in the UK rose for the forty-sixth straight month in February, with increases seen in all four surveyed regions. The strongest rate of salary inflation was recorded in the North, and the slowest in London.

 

This blog has been written with thanks to The Report on Jobs, a monthly publication produced by Markit and sponsored by the Recruitment and Employment Confederation.

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Report on Jobs – March 2016

Key points from the February survey:

  • Permanent placements increase at quickest pace in three months
  • Permanent salaries rise at stronger rate but temp pay growth eases

Commenting on the latest survey results, REC chief executive Kevin Green, said:

“The UK labour market is at a critical juncture. Permanent hiring improved last month, demand for staff remains strong, and pay is going in the right direction – but serious threats are looming just around the corner.

“Next week the Chancellor will announce his plans for the coming financial year, at a time when recruiters across the country are reporting serious skills shortages alongside buoyant jobs growth. Now is not the time to put up additional hurdles that could throw the jobs-rich recovery off course.

“The introduction of the National Living Wage on April 1st, closely followed by tax changes on April 6th, will disrupt hiring strategies for many businesses. Employers will seek to offset rising wage bills, for example by scaling back recruitment and increasing automation. This could weaken future demand for staff.

“In June, the EU referendum carries a very real risk that business confidence will be curtailed and investment in hiring could falter. It’s vital that we have an informed debate about the impact the referendum might have on jobs, both in the short and long term. All parties must remember that UK employers need access to the global labour market in order to thrive.

“Global economic headwinds only add to the uncertainty around what the months ahead hold, and the Recruitment and Employment Confederation calls on the government to avoid further destabilising the UK jobs market in next week’s Budget.”

Permanent placements growth at three-month high:

February data pointed to a further increase in permanent staff placements. The rate of expansion quickened slightly, reaching a three-month high.

Stronger rise in demand for staff:

The level of available job vacancies continued to rise in February. The rate of growth was marked and the fastest in six months. Demand for permanent staff continued to show a stronger trend than that for temps.

Slower fall in candidate availability:

The availability of staff for both permanent and temporary/contract roles continued to decline in February. However, rates of decline eased in each case to the slowest in at least two years.

Sharper increase in permanent salaries:

Starting salaries for successful permanent candidates rose at the fastest pace in three months during February. However, temp pay growth eased, hitting a 33-month low.

Employment rate and vacancies hit record highs:

The UK employment rate and number of job vacancies have risen to record highs, according to latest data from the Office for National Statistics (ONS).

At 74.1%, the employment rate is highest since comparable records began back in 1971. The number of employed now stands at 31.42 million, also a record.

There were 776,000 unfilled job vacancies in the three months to January, the highest since the series began in 2001. With only 1.69 million people unemployed, the jobless to vacancy ratio is the lowest for a decade.

The growth in employment was driven by rises in both employees and the self-employed, while 88,000 of the increase was attributable to previously inactive people returning to the labour market.

 

 This blog has been written with thanks to The Report on Jobs, a monthly publication produced by Markit and sponsored by the Recruitment and Employment Confederation.

 

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December Job Market Report

Key points for December:

  • Permanent and temporary appointments both increase at sharper rates
  • Candidate availability tightens further
  • Pay growth remains marked

 

Faster growth of staff appointments

The number of people placed in permanent jobs increased further in November. The rate of growth was marked, having accelerated to the sharpest since April. Higher placements were recorded at around 38% of panellists, compared with approximately 27% that noted a decline. Anecdotal evidence from recruiters pointed to increased confidence and higher activity levels at client companies.

Growth of permanent placements was broad-based across the monitored English regions during November, with the fastest rate of expansion signalled in the North.

 

Vacancy growth eases but still strong

Demand for staff continued to rise in November. Although easing to a 29-month low, the rate of expansion remained marked overall.  The data also signalled that demand for staff remained considerably stronger in the private sector than the public sector.

Latest official data from the Office for National Statistics (ONS) signalled that vacancies rose 5.3% on an annual basis in the three months to October. That was the slowest growth in three years.

 

Candidate availability falls at sharper rate

The availability of staff for both permanent and temporary/contract roles fell at sharp and accelerated rates in November with around 44% of panellists reporting a reduction versus less than 7% indicating a rise. All four English regions saw lower levels of permanent staff availability during the latest survey period. The sharpest falls were signalled in the South and London. Shortages of candidates for a range of skill-sets were reported by panellists.

All nine categories of permanent staff registered increased demand in November. The strongest growth was reported for IT & Computing workers, closely followed by Accounting/Financial and Executive/Professional staff.

 

Pay growth remains marked

Permanent staff salaries continued to rise in November. The latest increase was again strong, with panellists citing competition for qualified staff. Temporary/contract staff hourly pay rates rose at the fastest pace in three months, although growth remained slower than that seen for permanent employees.

Around one-quarter of panellists noted higher salaries, which they attributed to rising demand and shortages of qualified candidates. Higher salaries were indicated in all four English regions; with the Midlands posting the strongest increase overall.

 

Feature: Labour Market Tightness

Latest data from the Office for National Statistics (ONS) highlighted a further tightening of UK labour market conditions. The unemployment rate fell to 5.3% in the three months to September, down from 5.4% in the three months to August – the lowest since early-2008.

The actual number of people in unemployment fell by 103,000 in the third quarter compared with the previous quarter. That was the largest drop for a year and left overall unemployment at 1.749 million, the lowest in over seven years.

There are now just 2.4 unemployed people per vacancy, down from a peak of 5.9 four years ago. The current level of the vacancy ratio has in the past been consistent with stronger rates of pay growth than are currently being witnessed, suggesting that an increase in the rate of salary growth may be in store.

Nov Job market report graph

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November Job Market Report

Report on Jobs – November

Key points from the October survey:

  • Growth of both permanent placements and temp billings accelerates
  • Salaries continue to rise strongly
  • Candidate availability remains tight

Faster growth of permanent and temporary appointments…

October data signalled a further increase in permanent staff placements. Growth was solid and the sharpest in four months. Around 41% of panellists reported higher placements, citing robust demand for staff. Temporary/contract staff billings also rose at a faster pace, with the rate of expansion at a three-month high.

…underpinned by robust demand for staff

Vacancies continued to rise at a marked pace in October. Growth of demand for permanent employees remained sharper than that for temporary/contract staff. Growth also remained considerably stronger for the private sector rather than the public. Accounting/Financial remained the most sought-after category for permanent staff in October.

Strong salary growth maintained…

Permanent staff salary growth remained strong in October, and was similar to the rates seen during the third quarter. Temporary/contract staff hourly pay increased at a solid pace, albeit slower than that seen for permanent salaries.

Data from the Office for National Statistics indicated that annual growth of employee earnings (including bonuses) quickened to 3.0% in the three months to August, from 2.9% in the three months to July. Earnings growth rose to 3.4% in the private sector, remaining well above that in the public sector (1.1%).

Data from the Office for National Statistics signalled that average weekly earnings across the UK rose 2.5% year on-year to £580 in the second quarter of 2015. The East Midlands posted the strongest annual rise, up 11.3% to £547. The sharpest fall was seen in the South West, where average weekly earnings were down -1.9% on the previous year to £550.

…as candidate availability continues to fall

The availability of staff to fill permanent job roles fell further in October. Although easing to the slowest since January, the rate of decline remained sharp. Temporary/contract staff availability also decreased markedly, and at a slightly faster pace than in September. Around 36% of panellists reported lower permanent staff availability, three times the proportion that noted a rise. Permanent candidate availability fell in each of the four monitored regions, with the sharpest drop signalled in the Midlands.

Feature: Unemployment

Latest data from the Office for National Statistics showed that the UK unemployment rate dropped to a seven-year low of 5.4% in the three months to August.

There were 1.77 million people out of work in the latest period, down 79,000 from the previous quarter. The decline in unemployment more than reversed the increases seen in each of the previous three survey periods.

Employment rose to 22.77 million, up 140,000 on the quarter. Compared with one year previously, the total was 359,000 higher, of which 291,000 were full-time jobs. At 73.6%, the employment rate was at a record high

.UK unemployment Oct Job market report

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Job Market Report May 2015

Job Market Report May 2015

Key points from the May survey:Website Photos 069

  • Growth of permanent placements eases, but remains marked overall
  • Permanent salary growth remains strong

Permanent placements growth eases…

         …but temp billings rise at faster pace

                  Salary growth cools, but still strong…

                        …as candidate availability remains tight.

 

Permanent Placements

Permanent staff placements continued to rise in May. However, the rate of growth slowed to a four-month low.

Permanent placements growth was broad-based across the English regions in May. The South registered the fastest rate of expansion, closely followed by the Midlands.

 

Permanent Vacancies

Demand from employers continued to rise but at the slowest rate in five months (for permanent staff). Private sector vacancies continued to show a higher increase than public sector vacancies. Private sector permanent staff saw the fastest increase overall.

In terms of sector, Executive/Professional employees and Accounting/Financial topped the rankings for the fastest rate of growth in demand for permanent staff.

Other Vacancy Data

Latest official data from the Office for National Statistics (ONS) signalled that vacancies rose 14.9% on an annual basis in the three months to April. That was the slowest growth since October 2013.

Meanwhile, internet-based recruitment spending was up 4.5% on a year-on-year basis in the fourth quarter of 2014. This was the weakest rise since the first quarter of 2013.

 

Staff Availability

The availability of candidates to fill permanent roles continued to fall in May. The rate of decline remained marked, despite easing to the slowest in three months. Around 41% of survey respondents signalled lower availability, compared with fewer than 10% that noted a rise.

All four English regions saw reduced permanent staff availability during May. The South recorded the greatest decline.

 

Pay Pressures – Permanent salaries

Average starting salaries for permanent staff increased further in May. The rate of inflation remained strong, despite easing from April’s nine-month high. Around 32% of panellists reported a rise in salaries, compared with 3% that signalled a decline. Increased salaries were attributed by panellists to a combination of strong demand for staff and shortages of skilled candidates.

Salaries rose in all four English regions, with the Midlands posting the fastest growth.

 

UK average weekly earnings

Data from the Office for National Statistics indicated that annual growth of employee earnings (including bonuses) quickened to 1.9% in the three months to March, from 1.7% in the three months to February. This was driven by stronger pay growth in the private sector, offsetting a slowdown to near-stagnation in the public sector.

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April Employment Survey News

Key points from the April survey:office seating

  • Strongest increase in permanent staff appointments in eight months
  • Acceleration of pay growth for permanent and temporary staff
  • Candidate availability deteriorated further

 

The main findings for April are:

Permanent placements growth accelerates…

The number of people placed in permanent jobs by recruitment consultants continued to rise in April. In fact, the rate of expansion quickened to an eight-month high. This reflected a stronger increase in demand for staff, with permanent vacancies rising at the fastest pace since October 2014. This made it the strongest growth of demand for permanent staff in 6 months.

Pay growth strengthens…

Growth of permanent staff salaries accelerated to a nine-month high in April, with panellists highlighting a combination of strong demand and skill shortages. Hourly rates of pay for temporary/contract staff meanwhile increased at the fastest pace since July 2007.

…amid tight candidate availability

The availability of staff to fill permanent roles deteriorated further in April, with the rate of contraction accelerating to the sharpest in five months. As much as around 41% of panellists reported lower permanent candidate availability versus 9% noting an improvement. Temporary/contract staff availability meanwhile declined at a marked pace that was similar to that seen in March.

Public & private sector vacancies…

Private sector demand for staff continued to rise at a stronger pace than that for public sector workers in April. The fastest rate of growth overall was signalled for private sector permanent employees.

Other vacancy indicators…

Latest official data from the Office for National Statistics (ONS) signalled that vacancies rose 19.8% on an annual basis in the three months to March. That was the slowest growth since January 2014.

Meanwhile, internet-based recruitment spending was up 4.5% on a year-on-year basis in the fourth quarter of 2014. This was the weakest rise since the first quarter of 2013.

Top Permanent Staff Sectors for Recruitment…

Good news for candidates in the financial services job market as Executive/Professional was the most in-demand category for permanent staff in April, with Accounting/Financial in second place.

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March Employment News

reflected apple pc

 Key points in March:

  • Further marked increases in permanent placements
  • Salaries for permanent hires rise at sharpest rate in six months
  • Candidate availability tightens further.

The main indicators for March are:

Recruitment continues to rise strongly…

March survey data highlighted further marked growth of recruitment activity across the UK. Permanent staff placements rose at a rate unchanged from February’s considerable pace.

…supported by robust demand for staff

Job vacancies rose to a five-month high in March, signalling strong demand for staff. Marked rates of expansion were indicated for both permanent and short-term workers.

Salary growth fastest in six months…

Average starting salaries for people placed in permanent job roles increased further in March. The latest increase was the strongest since last September. Hourly rates of pay for temporary/contract staff rose at a robust pace, albeit slightly slower than in February.

…amid falling candidate availability

The availability of staff to fill vacancies continued to decline in March. The latest drop in permanent candidate supply was the sharpest in four months, while temp availability deteriorated at the fastest pace since last October.

 

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Market News Feb 2015

UK wide there has been stronger growth of staff appointments…

left laptopPermanent staff placements rose further in February. The rate of growth in appointments was marked and the fastest since last October….

…buoyed by improved demand for staff

Vacancies available for people seeking employment continued to rise in February. Overall demand for staff rose at the strongest rate in four months, with both permanent and temporary workers seeing faster increases.

Further marked rise in salaries

Permanent staff starting salaries continued to increase in February. The rate of growth was unchanged from the marked pace seen in January.

Candidate availability continues to fall

The availability of staff to fill job vacancies decreased further in February. Both permanent and temporary candidate supply deteriorated to a greater extent than in the previous.

Whilst in London and the SE…..

Permanent staff placements growth strengthens

Permanent placements increased further in February, continuing the trend shown since August 2012. Moreover, the

rate of growth accelerated since January, and was stronger than the average over the current sequence of expansion.

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