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KPMG: UK sees flurry of hiring activity — but demand outweighs supply

The war for talent is on.

Allie Nawrat

UK hiring
Credit: Foto Artist via Twenty20.

Unleash Your PotentialThe pandemic and associated restrictions have had a huge impact on the UK economy.

  • Things are looking positive for the UK’s job market as May sees an increase in hiring activity and more demand for workers.
  • However, research by KPMG and the REC, also noted that there is a shortage in staff supplies.
  • How can upskilling and reskilling help to tackle this?

The UK has been hit hard by the COVID-19 pandemic. According to John Hopkins University’s research, it has the seventh-highest number of cases and the sixth largest number of COVID-19 deaths in the world.

In addition, the pandemic and associated restrictions have had a huge impact on the UK economy. 2020 saw a significant decline in GDP; a decline on this scale has not been since the 1920s. In addition, the Office for National Statistics found that the UK’s unemployment rate reached 5% in September 2020, which is 1.2% higher than a year prior.

In an attempt to balance cases, deaths and the economy, the UK Government has taken a slow, gradual approach to leaving the third UK lockdown, which was imposed in January 2021. This began in mid-April and has been periodically eased since then — the whole country is now waiting to see whether all restrictions will be lifted on 21 June or not.

Thankfully, the easing of the restrictions seems to have had a positive impact on the UK’s job market.

According to a survey of 400 UK recruitment and employment consultancies by KPMG and the Recruitment and Employment Confederation (REC), May 2021 saw a marked increase in hiring activity, and demand for workers grew at the fastest rate since 1997.

There was significant growth in permanent staff appointments – this is the fastest pace ever recorded – but there was also significant demand for temporary staff, too. Temporary billings growth was also historically sharp; the quickest increase in six years.

Demand for candidates was high across all sectors, but the steepest increase in vacancies in May was in the IT and hotel, and catering sectors. Retail saw the softest expansion in demand.

Unfortunately, this growth in demand was not met with growth in candidate supply. The staff supply shortfall was the most severe in four years and may be linked to people’s reluctance to seek out risky, new opportunities, the fact that a lot of staff remain on furlough, and a decline in EU candidates due to Brexit and enduring travel restrictions.

However, this had a positive impact on pay; starting salaries for permanent jobs and temp pay both grew on April levels.

REC deputy CEO Kate Shoesmith commented: “Now is the time for action. With demand spiking, the skills and labour shortages that already existed in the UK have come into sharper focus – and COVID-19 has only made them worse.

“This is the most pressing issue in the jobs market right now, and has the potential to slow down the recovery.

“Employers must think about how they can attract the staff they need, for example by looking at the wage and benefits package on offer – there is particular demand for more flexible and hybrid work.

“But the government also needs to urgently look at improving access to work and opportunities for everyone to participate in training that will lead to a job. This should start with careers information that signals where job openings are being created and funding for the relevant work-related training.”

[Read more: Study: 69% of employers struggling to hire ‘appropriately skilled’ workers]

KPMG UK partner and head of education, skills, and productivity Claire Warnes added: “With demand for workers in May increasing at the fastest rate in 23 years, the jobs market seems to be firing on all cylinders, and we need this momentum to continue for our economy and businesses to fully bounce back.

“But the deterioration in staff supply intensified this month, with overall candidate availability declining at the quickest rate since May 2017.

“This is a worrying trend and the message is clear: we need businesses and recruiters working alongside Government to urgently address the skills gap by supporting candidates and employees to upskill and reskill to move into new roles.”

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