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Salaries soar as job market continues to bounce back

The latest KPMG/REC report on jobs shows a further improvement in recruitment activity in July. Robust demand for staff and the further rollback of pandemic restrictions led to a sharp increase in the number of people placed into permanent job roles in July, with growth easing only slightly from June’s all-time record. Temp billings meanwhile expanded at the quickest rate since June 1998.

Another notable feature of the report was that starting salaries increased at the quickest pace on record reflecting rising demand for staff and a further marked drop in candidate supply.  The rate of salary inflation was the sharpest seen in nearly 24 years of data collection for this report. Moreover, temporary/contract staff hourly pay rates rose at the second-quickest rate since the survey began amid unprecedented rise in demand for staff.

The latest vacancy data indicated faster increases in demand for both permanent and temporary workers in July. Growth of demand for permanent staff hit a fresh series record, while the upturn in temporary vacancies was the steepest since November 1997. Ongoing uncertainty stemming from the pandemic and concerns over job security contributed to another severe drop in candidate availability in July. Brexit was also cited as a key factor reducing the supply of workers, particularly temporary staff. Overall, candidate numbers fell at the second-sharpest rate in the survey history, easing only slightly from June’s record.

Kate Shoesmith, Deputy Chief Executive of the REC, said: “This month’s data confirms that it is a good time to be a looking for a new job. Employers are desperate to find good candidates for the many jobs on offer and this is reflected in starting salaries rising at the sharpest rate since the survey began in 1997. This will likely motivate more people to be on the lookout for new opportunities. The same goes for those on temporary contracts which are also seeing increased pay. Recruiters are working hard to fill places for employers eager to build back and recover but their job is made more difficult by worker shortages across all sectors.

“Pay increases alone, however, won’t solve the demand that has been building up over recent months. We need an immigration system that flexes to meet demand as was promised, and business and government need a long-term plan for skilling up workers. Skills shortages have been with us for a while and as our data shows are getting worse.”