The latest REC Report on Jobs kicks off with Kate Shoesmith, Deputy CEO, stating that
“we are moving into a new phase of the recovery, as the initial bounceback in demand starts to ease.”
What we are seeing is the resilience of the labour market as the furlough scheme ended, and recovery continuing apace, but not with quite the same extreme data of the most recent months.
The jobs picture
The main findings revealed for October include:
- Permanent job growth is still sharp, but it’s easing
Those in recruitment are busy placing people in both temporary and permanent jobs at the moment, but the intensity has eased a little. Indeed, the rates of expansion are now the softest that have been reported in six months.
- Candidate shortages remain painful
We aren’t escaping the candidate shortages, even though this too isn’t quite as intense as it was back in August. There’s a huge demand for staff at the moment and varied reasons, such as a shortage of foreign workers, as to why the candidates just aren’t there. Claire Warnes, Head of Education, Skills and Productivity at KPMG UK explains another reason, saying,
“Employees are hesitant to switch roles and sectors.”
Recruiters and employers need to do more to make this an easier shift for people.
It’s worth noticing that candidate shortages apply for both permanent and temporary roles, but the fall in availability is notably sharper for permanent candidates.
- Vacancies are still booming, but it’s softening
Plenty of new jobs are being advertised every day, but again the intensity of this is starting to ease with a five-month low in the growth of demand for staff. It’s still very strong though! Indeed, October was the ninth month in a row that saw the overall demand for staff in the UK rise. The Office for National Statistics (ONS) puts the total number of vacancies at 1,102,000 in October, which is notably high compared to the pre-pandemic level of 811,000.
- Starting pay heads upwards again
Shortage of candidate supply combined with robust demand means that it’s not unsurprising that pay increases are commonplace. Indeed, pay rates are increasing at the fastest rates seen in the 24 years that data has been collected.
The bigger picture
What’s really remarkable is that all of the above signals that trends that started before the ending of the furlough scheme are continuing as it ends. For 18 months the Coronavirus Job Retention Scheme (CJRS) supported 11.7 million workers, closing on 30 September 2021.
The scheme, which cost £70 billion, enabled the UK to keep unemployment low during the worst recession for 300 years. There were fears that when it ended, the can would merely have been kicked down the road. However, what we are seeing is that the labour market is more resilient than that. Of course, there are also concerns about creaking supply chains and rising inflation, but generally, the picture is much more positive than it was ever predicted to be. Hiring confidence remains high, and it looks likely, according to the latest Budget, that the economy will even return to pre-pandemic levels by as early as 2022.
There are going to be challenges ahead, but the recruitment sector and job market seem to be in a good position to handle them.