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Permanent recruitment picking up as employers compete to close skills gaps

10 Jan 2018 By Emily Burt

Starting salaries rising, says REC survey, but wider wage growth remains sluggish

The number of people placed in permanent jobs in the UK increased at the fastest pace in four months at the end of 2017, new data has revealed, despite national statistics warning of a decline in full-time employment and job vacancies between September and December.

Figures from the Recruitment & Employment Confederation (REC) and IHS Markit’s Report on Jobs, released on Tuesday (9 January) suggested the number of permanent staff placements in December increased at the quickest pace since August, with the growth of temporary placements also reported to be high.

Recruitment data gathered from a panel of 400 UK recruitment and employment consultancies reported a strong demand for staff, and a noticeable rise in permanent starting salaries. But it revealed that candidate availability in both temporary and permanent roles had declined sharply, with the REC reporting the fastest decrease over the last two years.

The new year recruitment boom was mirrored in figures released by website Totaljobs, which suggested that a record 54,000 jobs in the UK were advertised in the first week of 2018, marking a 20 per cent increase on the same period in 2016.

However, this contrasts with the latest official statistics from the ONS, which revealed that there were 56,000 fewer people in work in the UK from August to October 2017 than in May to July 2017, a 2 per cent overall fall in employment. Average real weekly earnings, including bonuses, also declined 0.2 per cent for British employees compared with a year earlier.

“The REC survey is focusing specifically on recruitment and individuals being placed in organisations, but is not necessarily looking at those who are leaving or being made redundant,” Charles Cotton, reward adviser at the CIPD, told People Management.  

The broader picture, including labour market issues, must be taken into consideration to reach a balanced view of what is really happening in the recruitment market, he said, meaning the government statistics are crucial to gaining an accurate view.  

Commenting on the findings, REC chief executive Kevin Green said employers were seeking assistance from recruiters and boosting salaries in an effort to compete for scarce skills.

“Employers, as a response to these candidate shortages, are offering increased starting salaries to attract staff – but while this has been the case for some time, it isn’t translating into significant wage growth across the economy yet,” Green said.

However, Cotton warned that increases in starting salary may not be good for employees in the longer term. “Organisations are increasing starting salaries to get people through the door but, once they are in there, then this does not improve particularly fast, and if they have been pointed to the top of their pay range they may not see much of a pay rise at all,” he said.

“That is an issue we called out last month in the CIPD’s latest reward management survey, which could throw up a number of employee relations issues in the longer term.”

According to the REC, the steepest increase in vacancies was seen among permanent workers in the private sector, closely followed by rising demand for temporary workers in the sector.

Relatively modest rates of growth were meanwhile seen for permanent and temporary vacancies across the public sector, reflecting recent figures from the ONS suggesting that public sector productivity was lagging behind overall growth in the UK.

Rising demand for temporary nursing and medical vacancies topped the demand across sectors, reflecting fears that a reliance on overseas workers could be leaving the NHS vulnerable in the run up to Brexit.

“Employers should always seek to confirm how long and enduring the recruitment surge will be before taking people on to permanent contracts,” Cotton said.

“Whether taking on new staff permanently or shifting existing employees from temporary to permanent contracts, it’s important to be creative and consider your working culture, what people are being paid, and non-financial benefits that could put you ahead in terms of recruitment, as well as ensuring you don’t undersell or oversell for the job you advertise.”

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