Labour Market Recovers as Lockdown Restrictions Ease

New research has shown that, over the month of March, hiring activity has substantially improved. The labour market showing signs of recovery is thought to be a result of lockdown restrictions easing, seeing many sectors re-open. 

The KPMG and REC ‘UK Report on Jobs’ has shown that there has been a significant improvement in recruitment activity over the previous month (March 2021),

This has been attributed to the rapid vaccine-roll out and the anticipation of COVID-19 restrictions being lifted over the following months.

As such, the number of vacancies expanded at its quickest pace in three years, since August 2018.

In addition to this, the growth in permanent placements almost hit a six-year high, reaching a growth rate of 59.2. Temporary billings expanded at the quickest rate since November 2017, signalling a sizeable recovery in the labour market as companies expect normal business conditions to return.

In response to this, demand for workers has also grown, increasing rapidly by the end of March. This has led to improved pay trends with starting salaries rising for the first time in 2021. Temporary wages also increased for the first time in three months, with the rate of inflation the quickest seen since December 2019.

Overall, it was the Midlands which saw the largest rise in vacancies whilst London saw the least.

Neil Carberry, Chief Executive of the REC, said:

For months, we have been talking about the potential recruiters saw for a recovery in hiring as we got on with vaccinations and the lockdown did its work. Today’s data shows that even during lockdown, our labour market was bouncing back. The strong temporary recruitment trend of the past few months has been maintained, but with a new addition – the fastest increase in permanent job placements since 2015. Taken together with a long-awaited recovery in hiring in London, this is a sign that business confidence is starting to flow back, even at this early stage of unlocking.

As companies start to recruit, they will need to appreciate that the labour market is still suffering from all sorts of shortages. So reviewing their hiring practices and doing things in the best way possible will matter more than ever. Inclusive hiring is not a tick-box exercise – it’s about finding the best candidate for the job no matter who they are, to help your business succeed.

Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK, emphasised the need for companies to focus on their skills gap:

This is good news for businesses, job seekers and the UK economy, but employers are still identifying a big skills gap across sectors including IT, construction and retail, with demand and supply not matching up.

That’s why as we start to look beyond the pandemic, businesses will be even more crucial in making sure prospective and current employees are adaptable, productive and ready for new challenges.