Starting salaries accelerate as candidate ‘shortages’ continue to bite

The latest figures from Recruitment and Employment Confederation’s (REC) monthly publication ‘Report on Jobs’, produced by IHS Markit, reveals Recruitment Consultancies reported a steep increase in both permanent and contract billings for May 2018.

Key points:

• Steep increases in both permanent placements and contract billings
• Severe staff shortages leads to quickest rise in starting salaries for three years
• Staff vacancies expand at the quickest pace since last November

Permanent staff appointments continued to rise at a robust pace and temporary billings expanded at the quickest rate in 2018 so far. The demand for staff overall strengthened to a six-month high in May, with sharp increases in both permanent and contract roles signalled by the latest data.

Overall candidate availability declined at a sharper rate midway through the second quarter. Permanent candidate availability fell at the fastest rate for four months, while contract and interim staff availability deteriorated at the quickest pace since November 2017. Strong demand for staff and low candidate availability underpinned further increases in starting salaries and contractor pay. Notably, starting salaries awarded to permanent workers rose at the steepest rate for three years.

A sharp expansion in permanent staff placements was again signalled in May, with just over 38% of the panel recording an increase. A number of respondents linked growth to rising business activity, higher staff vacancies and improved confidence amongst clients.

The growth of demand for staff reached a six-month high in the permanent sector. Engineering was the best performing sector in the demand for permanent staff league table during May with IT, manufacturing and Computing ranking second and with Accounting and Finance jobs third.

REC director of policy Tom Hadley says: “Despite growth in demand for staff this month, we have seen another severe drop in staff availability. Whilst it is encouraging to see a rise in staff appointments for permanent and contract and interim staff, indicating that employers are feeling confident in making hiring decisions, a lack of candidates remains a major challenge for recruiters - particularly in areas like nursing, engineering, manufacturing and IT jobs. Staff shortages are becoming business critical in many of these key sectors.”

“Because of the lack of candidate availability we are seeing employers paying higher salaries to attract the right people. This is only part of the solution, with employers also having to think about providing a more flexible working environment and progression opportunities. With skills needs and candidate expectations continuing to evolve, employers are having to radically re-imagine their hiring procedures. Government can help by ramping up the UK skills base and ensuring a balanced and evidence-based immigration system.”

Martin Crapper, Redline Group’s Managing Director comments: “Data from candidates consistently reinforces that their decision making about which interview to attend and which job to accept, is not only being influence by salary, but increasingly by the company and role on offer. They’re (rightly) asking important questions about opportunity, training, promotion, work-life balance (especially the millennials), work environment etc. it’s Redline’s task to ensure we’re able to identify AND attract those in-demand technology candidates on behalf of clients. To assist clients improve their attraction and recruitment results, we’ve developed innovative reports and surveys to give real-world feedback to clients on their individual performance and ‘attractiveness’ to candidates in the high-tech and technical recruitment job sector. Ask one of our Consultants for the latest Declination Survey, or Interview Feedback Survey for more info – we’ll then be able to offer practical solutions to improving your chance of securing the best talent out there.”

If you would like to know more about our customised approach to client engagement, please contact Martin Crapper on 01582 450054 or email MCrapper@RedlineGroup.com.