Home Business News Permanent placements rise at joint-record rate in April

Permanent placements rise at joint-record rate in April

by LLB Reporter
10th May 21 10:50 am

The latest KPMG and REC, UK Report on Jobs survey signified an increasingly positive trend for the London jobs market at the start of the second quarter. As national lockdown measures continued to ease, demand for staff rose markedly and the number of permanent placements rose at the joint-sharpest pace in the survey’s 23-year history. Companies showed further signs of preference for permanent workers, as vacancies continued to expand more quickly than for temporary roles, with temp billings increasing only slightly as a result. Meanwhile, pressure on salaries strengthened with latest data showing the quickest rise in permanent starting pay for 26 months, as well as a faster increase in temp wages.

The London report is compiled by IHS Markit from responses to questionnaires sent to around 100 recruitment and employment consultancies in the capital.

Permanent placement growth soars to joint-record high

The number of people placed into permanent jobs in London climbed at a considerable rate in April. The pace of hiring accelerated from March and was the joint-quickest in over 23 years of data collection (level with February 2010). The latest data marked only the second month of increasing permanent staff appointments since the COVID-19 pandemic began, with recruiters commenting that firms looked to expand their capacity as lockdown restrictions continued to unwind. An acceleration in permanent placement growth was seen in all four monitored English regions in April, led by the Midlands.

For the second consecutive month, billings received from the employment of temporary workers in London rose during April. However, in a sign that some companies preferred to hire permanent staff, the rate of increase in temp billings was softer than in March and only slight. Several panellists noted that IR35 regulations led to a drop in demand for short-term staff in some sectors, in part offsetting reports of increased demand in sectors such as hospitality. Much stronger rises in temp billings were recorded in the rest of England.

Job vacancies in London continued to rise sharply in April, with the rate of demand growth for permanent staff outpacing that of temporary staff for a second month running. Notably, permanent job positions rose at the fastest rate for nearly seven years, and to a similar extent to that seen across the UK as a whole. Positions for temp workers also grew at a marked pace, but one that was slower than the national trend.

Permanent staff supply growth eases to mild pace

After reaching peak levels in the second half of 2020, permanent staff supply growth eased to just a marginal rate in London during April. The respective seasonally adjusted index fell to its lowest since March 2020 when the pandemic began to impact the UK economy. This in part reflected increased hiring activity, but also continued unwillingness of workers to switch jobs. That said, staff availability rose overall due to reports of further redundancies, which contrasted with a sharp fall in candidate supply at the UK level and across the three remaining English regions.

The supply of temporary job candidates in London increased in April, thereby extending the current sequence of expansion that began in March 2020. However, the pace of growth eased from the preceding month and was the softest seen in this sequence. While some recruiters mentioned that more people had searched for temp jobs in April, others reported a drop in supply as staff placements rose. At the national level, latest data signalled a steep decline in temporary staff availability that was the quickest for over two years, with the North of England recording the sharpest fall.

Starting salaries for permanent staff continue to rebound

Adjusted for seasonal factors, the Permanent Salaries Index indicated a second straight month of rising salaries for newly-placed permanent staff in the capital. The rate of salary inflation in April was the quickest recorded for 26 months, and above the UK average. Higher salaries were generally associated with an increase in staff demand, with some panellists also noting that skills shortages contributed to inflationary pressures. While London led the way in terms of permanent salary inflation in April, all four monitored English areas reported a strong uplift in pay.

New temporary workers enjoyed a further boost to wages during April, following a renewed increase in temp pay at the end of the first quarter. Panellists commented that rising demand for short-term staff helped to drive the latest upturn. However, the rate of wage growth in London softened from the previous month and was behind the national trend. The South of England saw the quickest rise in temp wages, closely followed by the North of England.

Commenting on the latest survey results, Anna Purchas, Senior Partner for KPMG in London, said, “There are some very positive signs that the engine room of the UK economy is starting to power up again, as London emerges from lockdown hibernation.  Business confidence is returning, driving a record high in permanent recruitment levels across the capital and prompting a rise in starting salaries.

“The availability of staff has slowed off this month with many workers not confident in switching jobs until they are certain of the strength of recovery, whilst many staff still remain on furlough, reducing the pool of workers.

“It also raises a concern that candidate supply is slowing due  in part to applicants needing support to adapt their skills to move from displaced sectors such as retail to those where there is more demand, such as digital.

“London businesses will struggle 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 and policy makers have a fundamental role to play in bridging the increased skills gap that’s emerged from the pandemic and making sure that the provision is inclusive and reaches out to all communities in London.”

Neil Carberry, Chief Executive of the Recruitment & Employment Confederation added,“The jobs market is improving at one of the fastest rates we have ever seen, and that’s great news. We are bouncing back from a record low – and many people are still struggling – but the data shows that job creation is firing up again. This month’s numbers for permanent hiring are the best we’ve seen since the survey started in 1997. Temporary hiring has also grown again in London, and it will be very important to getting families and businesses back on their feet as the capital’s economy gets going again.

“The message for government and employers alike is that the long-term challenge is less likely to be high unemployment than attracting and training enough staff to keep our economy firing. Companies need to be thinking about their workforce planning and employee offer, which professional recruitment firms are best placed to support them with. Government needs to urgently tackle shortfalls in the skills system, and make sure the new immigration system is more responsive to our economic needs.”

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