Overall, the outlook for the jobs market on the back of May 2021 data is extremely positive. The market is really getting going again after the challenges of the Covid pandemic. As with last month, we’re seeing record breaking improvements. However, we need to temper this a little with how the supply of candidates is currently struggling to keep pace with demand.
Another month of positive headlines
The latest data revealed in the REC’s Report on Jobs is once again giving employers and candidates a much needed dose of positivity. There have been swift and vast increases in the number of candidates being put into new permanent jobs, and the same applies for temporary roles too. Indeed, vacancy growth has hit its highest since January 1998 – that’s right, that’s over 20 years!
These survey results also match the positive ‘official’ data from the ONS (Office for National Statistics). Their data showed a really good month for May with total vacancies standing at 657,000. This isn’t far off double the amount that were being advertised at the toughest point in mid-2020.
Highlights from the latest data
Fundamentally, the latest Report on Jobs paints a very encouraging picture of recovery, resilience and strength in the jobs market:
- As the UK economy opens, we are experiencing an unprecedented increase in permanent job offers, with the North seeing the greatest improvements overall. A similar pattern is being mirrored with temporary jobs too.
- There’s astronomical demand for new staff. The number of vacancies is expanding rapidly. Unsurprisingly, as such there have been huge increases in starting pay, with starting salaries rising to the greatest extent since late 2018.
- Temps are in huge demand. Indeed, even if you adjust for seasonality, we’re seeing rapidly increasing demand for temps, with the sharpest increase since February 2015. Again, the North of England is seeing a particularly intense demand for temps. Generally speaking, the greatest demand for temporary workers is within Blue Collar roles, but really, it’s across the board.
However, this is slightly tempered by our growing concerns about staff availability. Those of us with a finger on the pulse of the recruitment industry have been vocal about a looming problem with staff availability since well before the pandemic.
What we are seeing now is this coming home to roost. There are rapid declines in the volumes of candidate availability versus demand. Indeed, the latest data shows us the most severe reduction in candidate supply for over 4 years. It’s fast, and it applies to both permanent and temporary roles.
Skills shortages are a huge issue. This, combined with lingering pandemic uncertainty mixing with post-Brexit reductions in EU candidates, spell out accelerated falls in the numbers of candidates available. That’s before we add in IR35 legislation changes and the continuation of furlough. Combine this with the rising demand and there’s an issue making its way onto the horizon.
As with the positive news, it’s the North that’s experiencing this issue most starkly too.
Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK has made clear what this means for us by saying,
“This is a worrying trend and the message is clear: we need businesses and recruiters working alongside Government to urgently address the skills gap by supporting candidates and employees to upskill and reskill to move into new roles.”
Moving forwards with confidence
As each month of increasingly positive new data consolidates the gains of the month before, we can feel more confident that we are now truly moving in the right direction. Optimism is high and this is translated into ever growing employer confidence in their hiring decisions and the wider economy.
We need to embrace this confidence whilst being aware of the challenges arising too.