South: Permanent salary growth hits record high, says KPMG
April's REC-KPMG Report on Jobs: South has found that the declining pool of available labour continues to force pay up in the region, and the rate of inflation in salaries for newly-placed permanent staff accelerated for the third month running in April to a survey-record high.
The report, which contains original data from the survey of recruitment and employment consultants in the south of England (excluding London), is designed to provide a comprehensive and up-to-date guide to labour market trends and the data are directly comparable with the UK Report on Jobs.
Demand for permanent staff in the south continued to rise markedly in April. The rate of growth was unchanged from March’s five-month high. Similarly, temp demand increased at the fastest rate in six months, albeit at a rate which remained weaker than the UK average.
Permanent staff placements growth strengthens slightly
The number of people placed in permanent roles in the south rose for the 33rd month running in April. The rate of growth was broadly in line with the UK trend and stronger than the average over the first quarter of 2015, accelerating slightly since March. Permanent staff appointments in the UK rose for the 31st successive month in April, and at the strongest pace since August 2014. Regional data highlighted faster increases in London and the North, while the Midlands saw a moderation in the growth rate.
Recruitment consultants in the south reported higher temp billings for the 24th consecutive month in April. The rate of growth strengthened slightly since March, and was the second-strongest in nine months. Temp billings also rose across the UK as a whole. Although the weakest in six months, growth was still robust. Moderations were noted in London, the Midlands and the North.
Supply of permanent candidates continues to drop sharply
The number of people available for permanent positions declined for the 22nd month running in April. Moreover, the rate of decline in the supply of permanent labour remained marked, and slightly faster than the UK average. The total number of candidates willing to take on permanent employment across the UK fell again in April. Rates of reduction accelerated in London and the North, while a slower decline was registered in the Midlands.
The supply of temp labour in the south also fell sharply in April. The current period of falling temp candidates stretches to 20 months. The availability of candidates for temp/contract jobs at the national level also deteriorated. By region, the fastest drop was noted in the Midlands and the weakest (although still sharp) in London.
Permanent salary inflation at survey-record high
The rate of inflation in salaries for newly-placed permanent staff in the south accelerated for the third month running in April to a survey-record high. Permanent salary growth in the south was also the sharpest among the four monitored English regions during the month. Salary inflation in the UK reached a nine-month high during April, with the three other English regions recording stronger increases in permanent pay.
The rate of increase in wages for temporary staff in the south also rose markedly in April. The rate of inflation was the sharpest since November 2000, and in line with the UK average. The current sequence of temp pay growth now extends to over three years. Temp pay rates growth across the UK quickened to the strongest since July 2007. Two of the three remaining English regions saw faster rises, the exception being London. For the second successive month, the Midlands recorded the sharpest rate of wage inflation.
Andrew Morgan, office senior partner at KPMG in Reading, said: “There has been a resurgence of recruitment into Britain’s boardrooms, with businesses poaching top talent to drive their companies forward. This surge of executive hires is a strong indication of underlying business sentiment and their ambitions for the future.
“The declining pool of available labour continues to force pay up in the region. With two in five recruiters reporting falling candidate availability, spiralling salary growth remains a concern as businesses bid against each other to secure skilled staff. Salaries have now reached record heights in the south, creating concerns that a pay bubble is emerging, which simply isn’t sustainable.
“However, while the highest paid are benefiting from the recovery, demand for permanent staff remains more muted in the manufacturing sector. This section of the market is often the first to stall in tough economic conditions and the last to recover, emphasising the divergent fortunes facing job seekers in today’s market.”
