A new report signalled a further marked rise in hiring activity at the start of the final quarter of the year, leading to an inflation of starting pay. 

New research carried out by the REC and KPMG reveals vacancy growth remains robust but both permanent staff appointments and temporary billings softened to a six-month low.

This has been attributed to the continuation of a shortage in candidates, prohibiting recruiters from placing new hires.

As a result of this, the UK recorded the sharpest increases in starting pay since the survey began in October 1997, driven by a strong demand for staff and a steep fall in labour supply.

The same was recorded for temporary wages as companies offered higher pay to attract and secure staff.

Reduced candidate availability is thought to be caused by a variety of factors including high demand for staff, general labour shortages, fewer foreign workers and hesitancy among employees to switch or seek out new roles.

Regionally,  only the Midlands noted a stronger rise in permanent placements, as rates of increase slowed elsewhere. Nonetheless, growth remained sharp across all four areas.

The North of England posted the sharpest rise in temporary billings of all four monitored English regions.

Within the private sector, vacancies continued to rise more sharply than in the public sector, with the steepest increase in demand seen for permanent staff in the private sector.

Hotel & Catering saw the steepest increase in demand for permanent staff. Retail saw the softest rise in vacancies, albeit one that was still sharp.

For temporary staff demand in October, nursing topped the ranking for temporary staff, followed by Hotel and Catering.

Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, reacted to this:

While it’s encouraging to see hiring activity increase in October, the recovery was at the softest rate recorded in six months due to the ongoing deterioration of candidate availability. Employees are hesitant to switch roles and sectors, which could impact the bounce-back recruiters have experienced since the easing of pandemic restrictions.

More broadly, companies are still offering higher salaries to attract and secure talent – with starting pay inflation reaching another record high this month – but we know this isn’t the answer to boosting productivity.

Job seekers need to feel confident that the skills and qualifications they’ve gained in one sector are valued in another. That’s why employers and Government must urgently invest in training and development if they are to attract a wider range of candidates into these high demand sectors.


*This has been recorded in the latest KPMG and REC’s “UK Report on Jobs”, published in November 2021.