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Candidate supply drops at record pace amid 'war for talent'

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LONDON, ENGLAND - JUNE 04: A
There has been an unprecedented drop in the availability of candidates, deepening the current labour shortage, new data revealed. Photo: Rob Pinney/Getty

August saw a rapid increase in hiring activity as the economy emerges from lockdown restrictions and businesses ramp up recruitment plans. However, there has been an unprecedented drop in the availability of candidates, deepening the current labour shortage, new data revealed.

A report by KPMG and the Recruitment & Employment Confederation was compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 UK recruitment and employment consultancies.

It said the decline in candidate numbers was likely due to a reluctance among employees to switch roles due to the pandemic, fewer EU workers as a result of Brexit, along with furloughed staff and skill shortages.

“Candidate shortages continue to plague businesses, who are all recruiting from the same pool of talent and struggling to fill gaps,” said Claire Warnes, head of education, skills and productivity at KPMG UK.

“Right now, businesses can lead the way by working with government and civic leaders to rapidly address the reskilling and upskilling that is so urgently needed.”

Bev White, CEO of the Harvey Nash Group, told Yahoo Finance UK that "there’s a real war for talent going on in the UK."

Read more: Weetabix workers threaten strike over fire and rehire wage cuts

She said the company's research has found that more companies than ever are planning to increase headcount in their tech teams, but two thirds say that technology skills shortages are holding them back and this is impacting on their competitiveness. 

The most acute shortages are in cyber security, big data/analytics and DevOps. 

"DevOps is crucial to the fast development of systems and software, so shortages here are concerning. The competition is hotting up, and as a result salaries are on the rise as companies outbid each other to win talent over."

The report also showed that permanent staff appointments rose at a survey-record rate, while temp billings expanded at a historically sharp pace.

Vacancies grew at a rate that was only slightly below July's all-time record, as demand for both permanent and temporary staff remained robust, despite growth “softening slightly.”

A lack of candidates put upward pressure on starting pay. Salaries for newly-placed permanent staff increased at the fastest rate seen in nearly 24 years of data collection, while temp wage inflation was the second-quickest on record.

Read more: UK businesses warn national insurance hike will hit hiring

All four monitored English regions recorded faster rises in permanent placements in the latest survey period. The increase was led by London where growth hit a fresh record high.

All ten categories of permanent staff saw improvements in demand during August. The strongest growth was signalled for IT/computing, closely followed by hotel & catering.

Retail saw the softest, but still rapid, increase in vacancies.

Short-term vacancies rose sharply across all sectors monitored. The slowest increase was seen for the construction industry.

Watch: How to create the perfect CV

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