It’s been a somewhat mixed and turbulent start to 2022 for the UK economy, and of course that feeds through to the jobs market. While Omicron seems to have been navigated remarkably well, and recovery continues apace, we can’t escape rising inflation. We also need to have an eye open for how the war in Ukraine will affect the wider situation. Employer confidence is high, and employers are demonstrating they are now exceptionally skilled at weathering uncertainty, resulting in a tight labour market.
The Institute for Employment Studies estimates that the labour force is around half a million lower than pre-pandemic levels, and this is still notably smaller than it would have been if the pre-pandemic trends had continued. And while there is positive news across much of the jobs market in the latest Jobs Outlook Report from the REC, we need to be aware of looming challenges including cost of living rises, additional National Insurance costs and sizeable candidate shortages.
Let’s take a look at the latest Report in finer detail.
Rapid increases in hiring activity continue
The numbers are softer, but there’s still no escaping the fact that hiring activity is pretty intense. Confidence in hiring plans is high and us recruiters are certainly busy! However, the foot has come off the pedal slightly for permanent placement growth, with an 11-month low. It’s worth noting, though, that it could be candidate shortages that are slowing things rather than anything else. So while employers are demanding new staff and have got the business to do so, they are being hampered by difficulties getting candidates.
The North of England has seen the sharpest overall increase in hiring activity in February.
Candidate supply is a painful problem
Candidate supply fell in February at the quickest rate in three months. This is true for both permanent and temporary staff. It is also reported that the total supply of candidates fell for the twelfth month in a row. The labour market is tight and employers need to turn to leading recruitment agencies with proven success, especially in the post-Brexit landscape without the ability to easily bring in candidates from the EU.
In light of cost of living rises and the uncertainty this brings for individuals, employers need to work hard to entice candidates to make a move.
At the same time, vacancy growth is accelerating
The report reveals that February saw the first acceleration of vacancy growth since last July. This is driven by upticks in demand for both temps and permanent staff.
And so pay goes up
As a result, it’s no surprise that the competition for workers is still pushing pay up. Permanent starting salaries rose at the second-sharpest rate since REC records began in 1997. It applies to temporary wages too, with increases for the nineteenth month in a row in February.
When demand outstrips candidate supply we always see an increase in starting salaries. This is evident across all industries and is most marked in the North of England.
Overall, there has been a slight slowing in recruitment activity but this covers the reality that things are still very busy and employers are still extremely confident in their hiring plans. The lack of candidates is problematic for many, and we all need to take continued steps to address this.
Collaboration between employers, recruiter and candidates is the way to ensure that everyone gets what they need.