In the Markit’s latest report, the Recruitment and Employment Confederation (REC) said the availability of staff overall suffered its biggest fall last month in a year and a half. Headlines hit the media as the shortage of staff for British employers worsened in July, hurt by the departure of European Union workers after last year’s Brexit vote.
The survey says that pay rates for both permanent and temporary staff are rising quickly due to a continuing fall in the number of job applicants, something the Bank of England is watching closely as it considers when to raise interest rates from record lows.
“The parts of the economy most reliant on European workers are under even more pressure as many EU workers return home,” REC Chief Executive Kevin Green said.
“Employers are not just struggling to hire the brightest and best, but also people to fill roles such as chefs, drivers and warehouse workers.”
The survey, which examined 400 UK recruitment and employment agencies in July, found a ‘robust demand’ for staff, with the number of applicants placed in permanent, temporary or contract roles growing at their fastest rates for more than two years, matching figures from the Office for National Statistics (ONS) showing that employment levels in the UK are at a record high.
Meanwhile, it said, the number of available candidates for both types of work fell markedly during the month.
London, in particular, was feeling the strain, with hiring growing at a slower pace than anywhere else in Britain.
“Financial services, a crucial part of the London labour market, are not hiring in their usual quantity as the uncertainty caused by Brexit makes them hesitant,” Green said.
Earnings are now only 1.8% higher than a year ago – the slowest rate of increase since late 2014 – which has contributed to a cut in real incomes because the rate of inflation has been higher.
Looking at its own survey results, the REC said some of its members had noted that employers were indeed offering higher pay rates to lure the right recruits.
“Permanent starting salaries rose across all monitored UK regions, with the steepest rate of inflation seen in the South of England,” the REC said.
“Temporary and contract staff hourly pay rates increased again in July.
“The rate of inflation softened slightly since June, but was still one of the strongest recorded for the past two years,” it added.