New research indicates that permanent jobs growth in the UK has hit its highest rate since 1997. 

The latest KPMG and REC, UK Report on Jobs survey, has signalled a further improvement in labour market conditions in April, with hiring activity rising sharply for both permanent and temporary staff.

Overall, permanent vacancy growth outpaced that of temporary jobs – with the former increasing at the greatest rate since the late 1990s.

However, the data shows a significant drop in candidate availability as many people were reluctant to seek new roles amid concerns over job security. This has also been attributed to other factors including Brexit, IR35 legislation and furlough which was thought to have limited the pool of potential candidates.

As such, skill shortages and improved demand for staff led to further increases in starting pay for both permanent and temporary staff. Starting salary inflation hit a 14-month high, while temporary pay growth improved to its best for a year-and-a-half.

All the regions in England saw a sharp increase in the number of permanent jobs being offered, with the Midlands seeing the largest rise overall.

The same was found for temporary jobs although London only saw a mild expansion in this area.

IT and Computing saw the steepest increase in permanent staff vacancies in April, followed by Accounting/Financial and Engineering. Retail was the only sector to see lower demand for permanent staff, though the decline was only modest.

Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK, said:

There’s a lot to feel positive about this month, with the easing of lockdown improving business confidence in the economy and in turn driving a sharp rise in recruitment.

However, it’s concerning that we’re seeing a drop in candidate supply due in part to applicants needing support to adapt their skills to move from displaced sectors to those where there is more demand, such as health and care, and because the furlough scheme has reduced the pool of workers.

Companies will not be able to fill their vacancies unless they commit to reskilling and upskilling their current and prospective employees. This includes providing furloughed staff with training and working with recruiters to make sure as wide a range of candidates are considered for jobs. Businesses have a fundamental role to play in bridging the increased skills gap that’s emerged from the pandemic.

Neil Carberry, Chief Executive of the REC, also shared similar sentiments by urging the Government to consider “workforce planning and employee offer”. He further stated that the Government needed to “urgently tackle shortfalls in the skills system, and make sure the new immigration system is more responsive to our economic needs.”

*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.