As we reach the midway mark of the first quarter of the year, it’s an interesting and varied picture for the recruitment market. In many ways it’s ‘more of the same’ following the job market characteristics of the last few months, and in addition, we need to have an eye ahead on rising inflation and interest rates.
The Bank of England is predicting that inflation will peak at around 6% in the spring, and we can’t ignore the impact of this on the jobs market.
Most significantly, the candidate shortage is hitting very hard and employers need to rely heavily on skilled recruiters to find them the candidates they need. For now, confidence still remains high, but it is dropping and it is important that employers don’t begin to panic about the tight market, but instead work strategically to secure the skills they need.
This is made particularly interesting because the number of people taking themselves out of the picture is notable, with people retiring earlier and staying in education longer, on the back of the pandemic’s uncertainty.
The main findings
Looking at the Jobs Outlook Report from the REC for January 2022, the main findings are as follows:
- Hiring intentions are high
Confidence may be slipping somewhat, but employers still have a high intention to hire and believe they can.
- Recruitment activity is still rising sharply
With the pandemic restrictions easing, the Omicron peak passing, and overall high levels of confidence, the recruitment sector has been notably busy at the beginning of 2022. Permanent placements are growing sharply after having eased off a bit previously, despite 11 months in a row of growth. It’s even more marked in the temporary arena with temp numbers growing at the fastest rate since August 2021.
- Starting salaries are growing too
It’s no surprise therefore that starting salaries are continuing to push upwards in significant amounts. The combination of candidate shortages and increased demand means that employers need to offer candidates more. Indeed, the rise is the third sharpest on record (that’s since 1997, with record breaking hikes seen last autumn too). Temp wages are going up too but the rate of the growth has eased a little here.
In real terms, the Office of National Statistics (ONS) has realised that there’s been an increase in employee earnings of +4.2% in the three months to November. There’s a time lag on their data compared to the Report on Jobs but it’s interesting to look at this larger scale information.
- The importance of temps can’t be underestimated
January has seen the quickest rise in temp numbers since August 2021. This is most notable in the North of England. This is likely because of candidate shortages outstripping employer’s wishes to hire.
- Candidate supply continues to fall quickly
We are not out of the woods with candidate shortages at all. Indeed, the rate of decline has increased once more after a few months of seeing it ease. It’s not quite on the scale of summer 2021, but it’s highly impacting the jobs market. It’s most significant with those companies looking to fill permanent jobs.
- Vacancy growth is historically sharp
This is happening in the context that vacancy growth may be easing, but it is still historically sharp. There’s a high demand for all workers, both permanent and temporary. In the three months to the end of 2021, there were 1,247,000 vacant positions according to the ONS. This is the highest number on record. It’s substantially higher than pre-pandemic days. Demand for workers remains strongest in IT and Computing.
Employers, recruiters and candidates need to come together to help each other over the next few months as we tackle the challenge of rising inflation. It’s a tight market, but not an impossible one, when you approach it strategically.