KPMG and REC report on jobs in North of England
The report finds solid contraction in permanent appointments as candidate supply falls at faster pace.
- First decline in permanent placements for 77 months
- Faster falls in both permanent and temp availability
- Staff shortages lead to further rises in pay
The KPMG and REC, UK Report on Jobs: North of England is compiled by IHS Markit from responses to questionnaires sent to around 100 recruitment and employment consultancies in the North of England.
The Report on Jobs is unique in providing the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.
Permanent staff placements fall for the first time in 77 months
January data pointed to a renewed fall in the number of people placed into permanent job roles across the North of England. The reduction was the first seen since August 2012, and the fastest for just over six-and-a-half years. Some recruitment agencies commented on a hesitancy in hiring among their clients due to Brexit-related uncertainty. Permanent staff appointments also fell at the national level at the start of 2019. Albeit only marginal, the decline was driven by contractions in three of the four monitored English regions. The South of England was the only area to record growth.
Billings received from the employment of short-term workers in the North of England fell for the first time in six-and-a-half years during January. Although recruitment consultancies reported only a marginal rate of decline overall, the result contrasted with a modest expansion across the UK as a whole. The latest UK-wide increase was, however, the softest since September 2015, with a reduction in the capital also weighing on the UK average. The Midlands posted the fastest rate of growth, outpacing the South of England.
January survey data pointed to softer increases in demand for both permanent and temporary workers in the North of England. Notably, permanent staff vacancies grew at the slowest rate for 29 months. Despite registering a solid rise overall, growth of demand was softer than that seen at the national level. Short-term positions also rose at the weakest rate since August 2016, and at a pace that was slower than the UK average.
Sharpest fall in permanent candidate supply for 13 months
The number of candidates available to fill permanent job positions in the North of England fell in January. Permanent staff supply has now contracted in each month for the past six years. Moreover, the pace of decline quickened compared to December, registering the fastest fall since December 2017. Recruitment consultancies suggested that shortages were primarily for skilled workers. Across the UK as a whole, permanent labour supply fell at the sharpest pace since May 2017, extending the current run of decline to 69 months. The steeper contraction in available permanent workers was driven by London, which registered its strongest downturn for eight months and the fastest across all English regions.
The availability of temporary staff in the North of England fell during January, with the rate of decline accelerating to the quickest in five months. As was the case with permanent staff availability, recruiters mentioned a shortage of skilled workers. At the national level, there was also a fall in availability of temporary workers in January. The overall pace of decline was sharp and the fastest for 14 months. At the regional level, quicker falls in all four monitored English regions drove the latest decline, with the Midlands recording the sharpest contraction.
Permanent starters’ pay continues to rise sharply
The rate of starting salary inflation across the North of England remained sharp in January, despite softening from December. Recruiters in the region widely mentioned that competition for scarce candidates had contributed to the latest upturn in pay. That said, the rate of inflation was not as strong as seen across the country as a whole. UK permanent starting salaries rose markedly during January. The pace of inflation accelerated to its fastest since October 2018. Quicker salary growth in the Midlands and South of England contrasted with a slower expansion in London.
Remuneration awarded to temporary workers across the North of England increased strongly in January. This was despite wage growth easing to its slowest since October 2018. Some anecdotal evidence linked the latest rise to a shortage of skilled workers. Pay inflation in the region was softer than the UK average for the fifth month in a row. Though sharp overall, the increase in temp pay rates across the UK was weaker than that seen in December and the slowest for three months. The South of England posted the quickest rise, followed by the Midlands, London and the North of England respectively.
Commenting on the latest survey results, Chris Hearld, Northern Regional Chairman at KPMG UK said:
“Northern businesses might want to hire staff, but a chronic shortage of labour – particularly skilled workers – is now starting to bite. Not only will companies feel under resourced, they are also seeing wage and salary demands increase which will put more pressure on the bottom line.
“The message coming from the data is clear – the local business community needs to make sure that it continues to invest in creating, attracting and retaining talent if it to remain resilient and competitive.”
Recruitment & Employment Confederation chief executive Neil Carberry said:
“This is the first month since July 2016 where permanent placement numbers have dropped, with weaker – but still positive – performance for temporary roles, and the lowest rate of vacancy growth for over two years. But we should be careful not to overreact – employment rates are high, and the performance of our labour market overall is still strong. We also know that key sectors such as accounting, engineering and IT are facing shortages.
“That said, the survey results are a sharp reminder to politicians in Westminster and in Brussels of the need to provide businesses with clarity about the path ahead, so they can invest with confidence.
“In the public sector, the NHS continues to find it particularly difficult to find care workers and nurses – the effects of which are being felt by patients and overworked existing staff. Along with other sector shortages, this again emphasises the need for pragmatism on immigration and a clear post-Brexit transition period.”