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The latest survey by REC and KPMG shows vacancies continue to rise as the supply of workers contracts.
Vacancies and labour shortages continue to rise and staff supply kept falling in March, according to the latest KPMG and REC, UK Report on Jobs survey.
The imbalance of labour supply and demand drove further substantial increases in rates of starting pay, with salaries for new permanent joiners rising at the quickest rate on record in March, according to the survey which is based on responses from around 400 UK recruitment and employment consultancies.
While vacancies for temporary and permanent positions rose, the rate of increase slowed on previous months. However, the overall availability of workers continued to fall rapidly and March saw the steepest decline for four months, particularly for permanent roles. Reasons given were a generally low unemployment rate, uncertainty related to the pandemic and Ukraine war, fewer EU workers and robust demand for staff.
Vacancies rose across both the private and public sector at the end of the first quarter. The strongest expansion in demand was for permanent staff in the private sector, while the softest increase in vacancies was seen for permanent staff in the public sector.
As has been the case in each of the prior four months, IT and computing recorded the steepest increase in demand for permanent staff of all 10 monitored sectors in March. The softest, but still sharp, rise in permanent vacancies was seen in retail.
March survey data also pointed to a broad-based increase in temporary staff demand, with hotel and catering topping the rankings.
Neil Carberry, Chief Executive of the REC, said: “We can clearly see that labour and skills shortages are driving inflation in these latest figures. Starting salaries for permanent staff are growing at a new record pace, partially due to demand for staff accelerating and partially as firms increase pay for all staff in the face of rising prices. Record Covid infection levels are also pushing up demand for temporary workers, particularly in blue collar and hospitality sectors, underpinning the ability of temps to seek higher rates.
“However, the overall number of placements being made is starting to stabilise. This is no surprise after a period of historically high growth, and in the face of more economic uncertainty. Even so, the jobs market is very tight. Businesses will need to broaden their searches and be creative in making their offer to candidates more attractive, in consultation with recruitment experts. But government can help by incentivising investment in skills and people during the inflation crisis.”
Meanwhile, a report from the Resolution Foundation think tank suggests wages have not risen as fast as it might seem due to the Covid effect. It says headline wage growth figures does not take into account the impact the furlough scheme has had on keeping wages down.