Last reviewed 17 September 2021

August saw a further rapid increase in hiring activity as improved confidence around the economic outlook led businesses to push ahead with their recruitment plans.

However, according to the latest UK Report on Jobs survey prepared by KPMG and the REC (Recruitment and Employment Confederation), the month saw an unprecedented drop in candidate availability.

Furthermore, greater competition for workers led to a record increase in starting salaries for permanent staff coupled with a steeper increase in pay for short-term roles.

Permanent staff appointments rose at a survey-record rate, while temp billings also expanded at a historically sharp pace, the report noted.

Highlighting that recruiters are working around the clock, placing more people into work than ever, REC Chief Executive Neil Carberry said that it would be a mistake for businesses to think of these shortages as only a short-term issue.

“A number of factors mean that the UK labour market will remain tight for several years to come,” he went on. “Business leaders should be looking now at how they will build their future workforces, in partnership with recruiters, including the skills and career path development.”

Underlying data showed that unprecedented falls in permanent candidate numbers and temp staff supply had driven the latest deterioration in overall availability. The declines were widely associated with a reluctance among employees to switch roles due to the pandemic, fewer EU workers, furloughed staff and skill shortages.

Claire Warnes, Head of Education, Skills and Productivity at KPMG UK, said: “This crisis isn’t going away, and the winding down of the furlough scheme at the end of September — while potentially bringing more job hunters to the market — could also add fuel to the labour shortage fire””

Comment by Kate Palmer, HR Advice and Consultancy Director at Peninsula

With the impact of coronavirus still ongoing and the new immigration laws still in their beginning stages of implementation, it is no surprise that there is a chance that staff shortages could worsen.

Government intervention will be needed to curb the impact of this and help reduce the risk of potential business closures in the near future.

However, in the meantime, employers may need to consider other options, such as investing in training new hires to their desired standard — perhaps through apprenticeship schemes.