Permanent starting salaries rise at record pace - report

The Midlands region experienced a record rise in permanent salaries during July - amid a combination of sharp growth in demand for staff and a marked deterioration in the supply of candidates.

That 's according to KPMG and REC 's latest UK Report on Jobs: Midlands.

A further steep expansion in permanent placements was also recorded, while the rate of growth in temporary billings accelerated to the fastest since March.

The report is compiled by IHS Markit from responses to questionnaires sent to around 100 recruitment and employment consultancies in the Midlands.

The Report on Jobs provides a comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies and employers to provide the first indication each month of labour market trends.

Although softening from the record pace seen in June, the rate of growth in permanent placements in the Midlands remained rapid at the start of the third quarter of the year.

Recruitment consultancies indicated that placements had risen in line with greater demand for staff following the reopening of the economy.

The increase in permanent placements in the Midlands was slightly slower than that seen at the UK level. All four English regions saw permanent placements increase strongly, with the fastest expansion in London. The softest rise was in the South of England.

July data pointed to a sharp increase in temporary billings in the Midlands, with the rate of expansion accelerating to the fastest since March.

Some respondents suggested that temps had been hired given some difficulty in sourcing permanent candidates.

The rise in temp billings in the Midlands outpaced the UK average.

Permanent vacancies increased at a considerable pace in the Midlands during July, with the rate of growth ticking down only slightly from June's record.

In fact, the rise was the second-fastest since the series began in October 1997.

A similarly strong rise in demand for temporary staff was signalled at the start of the third quarter.

Furthermore, the rate of expansion quickened for the sixth month running and was the fastest since March 1998.

The Midlands saw a further substantial reduction in the supply of permanent candidates during July, with the rate of decline strengthening slightly to the most marked since August 2015.

Anecdotal evidence suggested that people currently in jobs were reluctant to move at present given high levels of uncertainty.

Recruitment consultancies indicated that temporary candidate numbers decreased at a rapid pace in July.

The pace of reduction was the sharpest since March 2015 and one of the strongest on record. A number of respondents indicated that Brexit had been a factor behind the drop in temporary staff numbers.

The Midlands registered the most marked deterioration in temp candidate supply, with the softest decline in London.

Permanent salaries for new joiners in the Midlands increased at the fastest pace in the survey's history in July, with the rate of inflation surpassing the previous record seen in November 2014.

A combination of rising demand for staff and a lack of suitable candidates was behind the increase in permanent salaries.

Kate Holt (pictured), people consulting partner at KPMG, said: “As employers compete for quality permanent candidates, it 's no surprise to see starting salaries rising as the demand for talent outpaces the supply. Now is certainly a good time for those searching for new roles to negotiate an attractive package.

“While it 's encouraging to see how healthy the jobs market is looking across the Midlands, it 's crucial that the focus on reskilling and upskilling isn 't lost.

“This is particularly important for both businesses and those looking to move into different sectors, as this is a challenge that still needs addressing. Also, with furlough ending soon, jobseekers will be mindful that there may be a downward pressure on pay to come, so the reluctance to move roles is likely to remain.

“Nevertheless, if the strength of the region 's job market and the resilience we 've seen since last year is anything to go by, the bounce-back for the Midlands is well underway. ”