UK – Recruitment activity rebounds in March as lockdown eases and vaccines progress - Staffing Industry Analysts

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08 April 2021

The number of permanent staff appointments across the UK rose for the first time in 2021 to date in March 2021 while temp billings growth hit a 40-month high, according to the latest Report on Jobs by the Recruitment and Employment Confederation and KPMG.

The report found that the rate of growth for permanent staff appointments was the sharpest recorded since April 2015. REC’s report also indicated that the government's roadmap to lift the national lockdown and vaccine progress had boosted market confidence and encouraged firms to hire more workers at the end of the first quarter.

Permanent placements expanded markedly across all four monitored English areas, led by the Midlands.

At the same time, the anticipated easing of coronavirus-related lockdown measures and expectations of more normal business conditions were cited as key factors driving the latest increase in temp billings. The Midlands recorded by far the sharpest increase in temp billings of all four monitored English regions, while the softest was seen in London.

The latest data from the REC signalled a sharp and accelerated rise in demand for staff in March. Demand for both permanent and temporary workers expanded at much sharper rates during March. The upturn was slightly quicker for permanent roles, but in each case the rate of growth was the steepest seen since August 2018.

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.”

Meanwhile, after rising sharply for most of the past year, permanent candidate supply was broadly unchanged for the second month running in March. Recruiters mentioned that while redundancies due to the pandemic and lockdown had driven up candidate numbers, this was largely offset by people becoming more reluctant to seek new roles until the pandemic and economic conditions improve.

The report also showed a decline in the availability of temporary workers at the end of the first quarter. Though only slight, it marked the first reduction in temp worker supply since February 2020. Reports from REC panel members indicated that the pandemic, Brexit and changes to IR35 legislation had reduced candidate numbers. However, there were still reports of job losses pushing up staff supply.

Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK, said, “The UK job market is starting to rebound off the back of the government’s plan to ease national lockdown measures over the coming months, with the highest rise in permanent placements in six years and a sharp increase in temporary billings.”

“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,” Warnes said.

According to the REC, there was a renewed rise in starting salaries for people placed into permanent roles during March. The increase ended a two-month period of contraction, with the rate of inflation the steepest recorded since February 2020. The report suggested that improved demand for workers had helped to lift salaries.

The Temporary Wages Index pointed to a renewed and solid upturn in average hourly rates of pay in March. Moreover, the rate of pay growth was the quickest seen since December 2019. Where higher temp wages were reported, this was generally linked to greater demand for short-term staff.

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