Permanent salaries

Starting salaries awarded to successful candidates placed in permanent jobs rose for a ninth consecutive month in July. Moreover, the rate of inflation accelerated to the strongest since February 2008. Just under 17% of panellists reported an increase in salaries during the latest survey period, which they attributed to stronger demand for permanent staff and shortages of quality candidates.

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Key points from June survey:

• Further strong rise in permanent staff placements, albeit slowest in five months
• Growth of temporary/contract staff billings eased to seven-month low
• Engineering/Construction most sought-after staff category
• Improvement in candidate availability
• Wages and salaries continued to rise

Commenting on the latest survey results, Bernard Brown, Partner and Head of Business Services at KPMG said:

“Demand for workers across all sectors continued to rise in June. Clearly, the proposed public sector cuts have not yet had an impact on the UK jobs market. However, it can now be only a matter of time before we will start to see the impact of the government’s efficiency savings strategy which is likely to leave hundreds of thousands of public sector workers looking for employment. The big challenge will be to transfer as many of these jobs as possible to the private sector through outsourcing and divestment, otherwise the economy will be put under enormous pressure at all levels.”

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KPMG’s Report on Jobs (see below) shows that this pattern is repeated across all sectors.

Pay Pressures

The recruitment industry survey tracks both the average salaries awarded to people placed in permanent jobs each month, as well as average hourly rates of pay for temp/contract staff.

Permanent salaries

May data highlighted a rise in starting salaries awarded to successful candidates placed in permanent jobs by recruitment agencies. The latest increase was the seventh in consecutive months. Pay inflation was solid, despite easing from April’s twenty-five month high. Consultants generally commented that higher salaries were the result of employers looking to attract skilled staff.

Temp/contract pay rates

Hourly rates of pay for staff in temporary/contract employment increased for a fifth consecutive month in May. However, the rate of growth eased since April and was subdued compared with the series’ long-run trend.

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This is mirrored in the KPMG’s ‘Report on Jobs’ for April which also shows a faster increase in permanent and temporary salaries and continued upturn in permanent placements.

The Report on Jobs (excerpt below), a monthly publication produced by Markit Economics and sponsored by the Recruitment and Employment Confederation and KPMG LLP shows:-

Weaker growth of candidate availability

Although recruitment consultants reported further improvements in the availability of permanent and temporary/contract staff during April, in both cases the rates of growth slowed since the previous month.

Availability of permanent staff

The availability of staff to fill permanent job vacancies continued to rise in April, extending the current period of growth to twenty-five months. However, the rate of improvement eased to a moderate pace that was the weakest for two years.

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The Report on Jobs (excerpt below), a monthly publication produced by Markit Economics and sponsored by the Recruitment and Employment Confederation and KPMG LLP shows:-

Stronger rise in demand for staff

The Report on Jobs Vacancies Index signalled an increase in overall demand for staff for the fifth month running in February. Moreover, the rate of growth accelerated to the strongest since July 2007. This was indicated by the Overall Staff Vacancies Index climbing from 61.5 to 62.4.

Permanent staff vacancies

Demand for permanent staff continued to rise during February. The Permanent Staff Vacancies Index recorded 62.7, up from 61.7 in January and its highest level for over two-and-a-half years.

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They are being notified across the commercial finance sector with a number of new entrants helping to re-energise the market.

A further positive signal is the number of employed candidates who are now looking for a career move, reflecting a measured confidence returning.

Key points from January survey:

• Growth of permanent placements eased from December’s peak but remained strong
• Temporary/contract staff billings continued to rise at marked pace
• Demand for staff grew at strongest rate since July 2007
• Candidate availability increased at slower pace
• Pay pressures remained subdued

Commenting on the latest survey results, Bernard Brown, Partner and Head of Business Services at KPMG said:

“The UK jobs market is continuing its journey back to health. Placements of permanent and temporary jobs have been rising again in January although at a slower pace than a month before, a reminder that the road to recovery will be bumpy. As confidence has returned to the private sector the starting gun for a public sector recession has only just been fired and its impact on the jobs market will be felt over the next 12 to 18 months.”

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The recruitment industry survey tracks both the average salaries awarded to people placed in permanent jobs each month, as well as average hourly rates of pay for temp/contract staff.

Permanent salaries

Starting salaries awarded to successful candidates placed in permanent jobs increased for the second month running in December. Furthermore, the latest rise was the fastest since June 2008. Where higher salaries were reported (by 12% of panellists), this was usually attributed to stronger demand for staff.

Temp/contract pay rates

Hourly rates of pay for temporary/contract staff decreased for a fifteenth successive month in December. However, the rate of decline eased to only a marginal pace that was the weakest in that sequence.

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Commenting on the latest survey results, Bernard Brown, Partner and Head of Business Services at KPMG said:

“The UK jobs market looks healthier today than at any time in the last two years which is, of course, encouraging news. Sectors like accounting and banking lead the recovery and we may well have reached the tipping point into growth, driven by returning confidence in the private sector.

“However, we are still to see the impact of the looming public sector recession on the jobs market, which will play out over the first twelve months of a new parliamentary term.”

Copies of the report are available on annual subscription from Markit. For subscription details please contact: economics@markit.com Tel: +44 1491 461000

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