UK Labour Market Conditions - October 2021 Job Market Report

Key findings

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October 8, 2021 By Chris Sale

“What’s the job market like?”: October 2021 KPMG & REC UK Report on Jobs

Key findings are:

• Hiring activity rises sharply with robust demand for staff
• Increases in starting pay/salaries
• Candidate supply falls at “near record pace”
• ONS data shows vacancies at an all time high and 30% higher than the last peak in 2019
• “Executive and Professional” category however registering the slowest increase albeit still a sharp rise

IT/Computing, Hotel & Catering and Engineering are in strong demand. Executive /Professional performed weakest in both the Permanent and Contract surveys.

As a further twist there was also reference to a lack of confidence among potential candidates over whether it was wise to switch jobs given the continued economic uncertainty.

At the regional level, the rise in vacancies was broad-based and led by the North of England. The Midlands recorded the softest increase in permanent placements, albeit one that was still marked.

Across the UK there was another decrease in the availability of permanent candidates during September. Each of the four monitored English regions saw permanent staff supply fall in September, with the North and South of England recording the joint-sharpest reductions.

Across the four regions, the rise in starting salaries was broad-based, with the North of England reporting the strongest inflation.

Overall job vacancies across the UK hit a fresh record high in the three months to August. The number of vacancies stood at 1,034,000, up from 959,000 in the preceding three-month period, and marked the first time that vacancies had exceeded 1 million.

Job opportunities remain below pre-pandemic levels for a quarter of the UK workforce, with more slack in the labour market than official estimates show.

New job openings had risen by about 20% above pre-pandemic levels by June of this year, according to the think tank, but with the surge in vacancies being driven by low-paying occupations.

Opportunities in higher-paid service occupations had been slower to recover, especially those often taken by women and graduates, with vacancies for more than 8 million workers still at least 10% below pre-pandemic levels.

Commenting on the latest national survey results, Claire Warnes, Lead Partner at KPMG, said:

This month’s unprecedented increase in starting salaries – the highest in 24 years – is being driven by the near record fall in candidate availability. While higher salaries are good for job seekers, wage growth alone is unlikely to help sustain economic recovery because of limited levers to bring people with the right skills to where the jobs are and increase productivity.

The sharp rise in hiring activity is a reason to be hopeful, but competition is fierce. The end of the furlough scheme should be bringing tens of thousands of new people to the jobs market, but many do not have the right skills to transfer to the sectors with most demand.