Sharp rise in demand for staff could spark a ‘vacancy vacuum’

There was a record fall in permanent staff availability in June, according to the latest Recruitment and Employment Confederation (REC) and KPMG Report on Jobs which found the rate of contraction has accelerated to the sharpest seen in the survey’s history, which began back in October 1997. There was also a sharp deterioration in availability of temporary/contract staff, with June’s drop the greatest seen since March 1998. Amid reports of a shortage of suitable candidates, and with demand for staff increasing, permanent salaries rose during June at a survey record rate. However, as demand for staff has grown, this month saw the number of workers available to fill vacancies plummet to an all-time low, in particular across business development and sales. The latest report fuels concerns of a vacancy vacuum – and a reminder for employers that, for staff, remuneration is about much more than take home pay.

Commented Bernard Brown, Partner and Head of Business Services at KPMG: “Once again employers seem ready to ‘splash the cash’ in what appears to be a desperate attempt to lure skilled staff from competitors.

“Yet despite offering starting salaries at a rate that has not been seen during the survey’s 17 year lifetime, it is clear that candidates are not easily swayed.  As consumers they may be facing rising house prices and struggling to build financial reserves because of low interest rates, but the desire for extra disposable income is not yet translating into a generation of employees who are only loyal to their monthly pay cheque.

“It’s a message employers would do well to take to heart as, although many might argue that by offering higher pay packets, they are showing market confidence, the truth is that continued starting salary growth is unrealistic and unsustainable over the long term.

“Ultimately candidates are also suggesting this by voting with their feet, because we have also just witnessed the biggest fall in candidate availability for 17 years.  Perhaps this means that the productivity gap is being replaced with another chasm – a vacancy vacuum – and one that is unlikely to be resolved until employers recognise that, for staff, remuneration is about much more than take home pay.”

The latest Recruitment and Employment Confederation (REC) and KPMG Report on Jobs provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies.

For more information contact economics@markit.com.