KPMG UK's head of education, skills, and productivity, Claire Warnes, said,
“This month’s unprecedented increase in starting salaries – the highest in 24 years – is being driven by the near record fall in candidate availability. While higher salaries are good for job seekers, wage growth alone is unlikely to help sustain economic recovery because of limited levers to bring people with the right skills to where the jobs are and increase productivity.”
Recent data also showed that a rise in the rate of permanent postings slowed somewhat after reaching a new high in August. The permanent placements score in the study is 71.8, up from 72.7 in August — a value above 50 signals growth.
Why is this happening now?
There are a variety of reasons why this is happening right now. The present shortage of skilled workers is one of the key factors leading to this shift.
Since the study began in 1997, the number of job openings has risen at the highest rate. The number of people looking to fill them fell almost as quickly as it had risen to a new high in June. The candidate pool has significantly reduced despite the fact that openings have grown.
Andrew Bailey, the current Governor of the Bank of England (BOE), stated, “There is growing evidence of higher job vacancies and associated labor market tightness. The challenge of avoiding a steep rise in unemployment has been replaced by that of ensuring a flow of labor into jobs. This is a crucial challenge.”
After Brexit reduced EU immigration and the pandemic pushed employees to seek more secure employment, U.K. businesses, including shops to construction industries, are battling to fill labour vacancies. As aforementioned, this has changed the Bank of England's focus away from unemployment and toward ensuring that there are enough employees to fill open positions.
Despite the fact that there has been a significant rise in the number of vacancies, competition is still relatively fierce. Warnes stated that competition within the market was fierce due to the fact that a majority of the workforce do not have transferable skills nor the correct talents to transition into another sector with high demands.
Robert Walters, current CEO of the Robert Walters Group, which hires attorneys, accountants, and IT experts, also argued that “there are shortages in pretty much any country you care to name". He continued to add that there was a shortage of people who are skilled enough to take up roles that are in demand right now, and that more and more jobs are now becoming more difficult.
The general sentiment backed by the data found shows that although this may be a good time to seek new jobs, companies are finding it extremely difficult to hire skilled workers.
According to a poll issued in July by the British Chamber of Commerce, which represents employers from a range of industries, 70% of businesses are having difficulty recruiting employees, up from just over half in mid-2020.
Hospitality and construction were once again among the hardest hit industries.
How are businesses trying to avoid the challenges of staff shortages?
In order to mitigate the consequences of staff shortages, companies in all industries are going to great efforts to recruit and keep employees, increasingly relying on temporary labour and raising compensation with the purpose of recruiting the most ideal candidates for their own businesses.
For example, in response to a driver scarcity, British retailer John Lewis proposed a £2 hourly wage rise for its drivers. Tesco is also one of several companies giving their new employees welcome incentives.
Increasing salary wages can certainly be enticing for job seekers but this move has attracted criticism by many as businesses call on the government to collaborate with companies in order to implement a more sustainable growth in wages and candidate availability.
The Coronavirus pandemic has certainly made an impact on the economy which has severely affected many businesses and individuals. Operating a business during such uncertain and difficult times can be taxing and overwhelming for many, and in order to ease your business needs, we at Persona Finance can provide the best remote accounting services for all business types.
For more information, please contact Persona Finance at [email@example.com].