Over the early summer there has rightly been a lot of positivity about the state of play in the jobs market.
As COVID restrictions were lifted, hiring activity got underway at pace.
However, we need to temper that positivity with a little caution. Indeed, Neil Carberry, Chief Executive of the REC, highlights the issue by saying,
“Switching the entire economy on over the summer has created a unique demand spike, and a short-term crisis. But it would be a mistake for businesses to think of this as only a short-term issue.”
It’s a job seeker’s market
The fundamental reality in the job market sees two sides of a tug-o’-war: on one side is extreme hiring activity growth and on the other is a shortage of candidate supply. Diving in a little deeper, the latest data reveals:
- Sharpest increase in permanent placements on record
We’ve been here a couple of times over the last few months, but August again showed a sharp increase in the number of candidates being placed in permanent and temporary jobs – both rising at historically high levels. This has been evident across the country, led by London, but the North has seen record high growth.
- Growth of demand for staff holds close to all-time high
Unsurprisingly, sitting alongside this, August showed a continued fast expansion in vacancies, only slightly dipped from the July all-time record. This is matched by data from the Office for National Statistics (ONS) which revealed there were 953,000 vacancies which is 2.5 times more than were seen at the same time last year.
This is the highest ever number recorded by the ONS. Indeed, the REC’s Jobs Recovery Tracker, which has been watching the state of play throughout the pandemic, showed there were 1.66 million active job adverts at the end of August. These figures have been consistently high now since June.
- Availability of workers falls at unprecedented rate
This situation is exacerbated and becomes problematic because of the shortage in candidate supply. Indeed, candidate supply “worsened to the greatest extent on record” in the third quarter.
There are various reasons why this is. Individuals are still wary and unsure about changing roles on the back of the uncertainty of the last few years. There are fewer EU workers to plug the UK’s shortages. And skills shortages are a huge and looming issue in many industries.
- Sharp increases in starting pay
It’s not surprising therefore that starting salaries and temporary wages are continuing to rise. Indeed, starting salaries for permanent staff have increased at the fastest rate since the REC began collecting data. This is mirrored by the ONS showing that employee earnings increased +8.8% year-on-year in the second quarter of 2021.
The approach needed now
Business leaders now need to candidly consider their future workforce needs. Sticking heads in the sand will only worsen the outcome.
Instead, by planning the workforce, looking at skills and talent needed, and considering how this can be managed through career path development, immigration, reskilling and careful partnership with exceptional recruiters, it’ll be possible to thrive.
For now, the focus really needs to be on why an individual would choose to work for you over someone else, and why they will stay.