As the country experiences an unprecedented drop in candidate supply, hiring activity continues to accelerate.

The latest KPMG and REC, UK Report on Jobs has shown the sharpest increase in permanent placements on record, alongside temp billings expanding at a historically sharp pace.

The easing of COVID restrictions has allowed businesses to ramp up their recruitment plans, and as business confidence continues to improve, a robust demand for staff has led to a further increase in hiring activity during August.

Vacancies expanded at a rate only slightly below the all-time record in July, as demand for both permanent and temporary staff remains high.

However, the country continues to experience a massive labour shortage, with candidate supply worsening to the greatest extent on record midway through the third quarter.

Many are blaming this decline on a reluctance among employees to switch roles due to the pandemic, but also the lack of EU workers, and alongside this, the skills shortage across the country remains problematic for many organisations.

This labour shortage has led to a record increase in starting salaries for permanent staff, and a steep increase in pay for short-term positions.

In fact, salaries for newly placed permanent staff have increased at the fastest rate seen in nearly 24 years, whilst wage inflation for temporary staff was the second quickest on record.

The rise in permanent placements was led by London, where growth hit a fresh record high, but this was followed by unprecedented upturns registered in the North and South of England, highlighting the way in which the candidate shortage is prevalent across the country.

All ten categories of permanent staff measured by the survey saw improvements in demand during August, with the strongest growth signalled for IT/Computing, followed by Hotel and Catering, and even the category with the softest increase in vacancies, retail, still measured rapid growth.

Commenting on the latest survey results, Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said:

This crisis isn’t going away, and the winding down of the furlough scheme at the end of September – while potentially bringing more job hunters to the market – could also add fuel to the labour shortage fire.

Many businesses will have changed their business model during the pandemic, and so significant numbers of staff returning from furlough may need reskilling to rejoin the workforce in the same or another sector.

Neil Carberry, Chief Executive of the REC, said:

In August, the number of staff available to start jobs fell at another new record rate, deepening the current labour shortage. Recruiters are working around the clock, placing more people into work than ever as these figures show.

Switching the entire economy on over the summer has created a unique demand spike, and a short-term crisis.


*The KPMG and REC, UK Report on Jobs is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.