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REC/KPMG Report on Jobs: Volume of permanent placements continues to rise, but rate of growth eases

Slower growth of staff appointments…
Permanent staff placements continued to rise in January, but the rate of expansion eased to a 20-month low. Temp billings growth moderated slightly to the least marked since October 2014.

...despite accelerated rise in demand for staff
January data pointed to a faster increase in demand for staff, with the overall level of job vacancies rising at the strongest rate in three months. Sharper growth of both permanent and temporary vacancies was recorded.

Strong pay growth maintained
Average starting salaries for people placed in permanent jobs continued to rise at a marked pace in January, with the rate of growth quickening to a four-month high. Temp pay also increased further, but the latest rise was the weakest in nine months.

Slower fall in candidate availability
The availability of staff to fill permanent job roles fell further during January. The rate of deterioration was marked, despite easing to the slowest for a year. Temporary/contract staff availability meanwhile fell at the weakest rate in 11 months.

Regional and sector variation
The Midlands registered the fastest increase in permanent placements in January, while the slowest expansion was indicated in London.
Temp billings rose fastest in the Midlands during January, while the weakest increase was signalled in the South.
Demand for staff remained considerably stronger in the private sector than the public sector during January. The strongest expansion was signalled for private sector permanent employees.
Nursing/Medical/Care was the most in-demand permanent staff category during January. Engineering took second place in the demand for staff ranking. The slowest rise was signalled for Hotel & Catering workers.
Demand rose for all monitored temporary/contract staff categories during January. The strongest rate of expansion was signalled for Nursing/Medical/Care workers. Executive/Professional registered the slowest growth.

Kevin Green, REC chief executive, says:

“The number of vacancies for permanent and temporary jobs continues to increase rapidly as confident businesses expand their workforces.
“January saw more people secure a new permanent job via a recruiter than in December and the decline in the number of available candidates means competition for skilled workers is driving up pay. With record levels of employment and falling inflation, this means many workers should feel better off in 2015 than they did in 2014.
“It’s encouraging to see these positive trends aren’t focused just in the South East, with all regions reporting rises in people finding jobs and pay increases with the North and the Midlands both reporting robust growth.
“However, the rate of growth in placements is beginning to ease and while the pressure of skills shortages is benefitting new hires via more generous pay offers, in the medium and long term the situation poses real problems for sustainable business growth.”
He added:
"It’s good to see the significant increase in permanent vacancies in the health and care sector this month. There are a variety of factors that could be contributing to this spike including February being a start date for doctors’ contracts, increased political pressure on trusts to use permanent rather than temporary staff and new guidance on safer staffing ratios. It will be interesting to see how this plays out in the next few months as we know candidates to fill nursing and care jobs are already hard to find.”

Bernard Brown, Partner and Head of Business Services at KPMG, comments:

“They say good news comes in threes and it certainly seems to be the case for the UK economy. The past month has seen a rise in employment, a jump in the number of jobs being created and a growing number of firms prepared to pay more to land the best staff.
“However, the good news is only half the story. Starting salaries may be continuing to rise for the jobs being created today, but this is unsustainable over the long term. Employers will reach a point where they cannot afford to keep throwing money at candidates, no matter how much their skills are in demand. We are some way off this happening, but if does, candidates who are in demand today might find it harder to knock doors down, tomorrow.”

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