Record rise in starting salaries as permanent candidate availability plummets

Record rise in starting salaries as permanent can...

The Recruitment and Employment Confederation and KPMG Report on Jobs published today provides the most comprehensive guide to the UK labour market

Also on

  • Permanent and temporary staff availability both tumble
  • demand for staff and placements both continue to rise sharply
  • series record increase in average starting salaries recorded


The Recruitment and Employment Confederation (REC) and KPMG Report on Jobs – published today – provides the most comprehensive guide to the UK labour market, drawing on original survey data provided by recruitment consultancies.  

Record fall in permanent staff availability in June…

The latest survey of UK recruitment consultancies indicated a considerable reduction in the availability of staff to fill permanent roles. The rate of contraction accelerated to the sharpest seen in the survey history, which began in October 1997. Temporary/contract staff also recorded a sharp deterioration in availability, with June’s drop the greatest seen since March 1998.     

...helps drive starting salaries up at series record pace...

Amid reports of a short supply of suitable candidates, and with demand for staff increasing, permanent salaries rose during June at a survey record rate. Salaries have now risen for twenty-six months in succession. 

Moreover, temporary/contract staff hourly pay rates rose at the sharpest rate since November 2007.  

…as demand for staff continues to grow...

Latest vacancy data indicated faster increases in the demand for both permanent and temporary staff during June. Growth was led by the private sector, with demand here continuing to rise at a rate that comfortably outstripped those seen in the public sector. 

...and placements rise

As companies sought to efficiently fill vacancies, permanent placements continued to increase during June. Although remaining sharp by historical standards, the rate of growth was the lowest seen since last November. Temporary/contract staff billings in contrast increased at the sharpest pace for five months.

Regional and sector variation

Of the four broad English regions for which data are available, the sharpest increase in permanent placements was seen in the Midlands, closely followed by the South. London remained a relative laggard, although even here growth was historically strong. Leading the way in terms of temp billings growth was the Midlands followed by the South. The North saw a stronger increase in temp billings, but London recorded a slower rate of expansion.

June’s survey results again showed that demand for staff continued to increase at a considerably quicker rate from the private sector for both permanent and temporary workers. In both the public and private sectors, demand for temporary workers rose at rates that outstripped those seen for permanent staff.

Engineering was the best performing sector in the demand for staff ‘league table’ during June. Construction also continued its recent strong performance, recording a considerable rate of growth. Hotel & Catering was the weakest performer.

Engineering workers were also the most in-demand type of temporary staff during June, followed by Blue Collar and then Construction. Demand for temporary staff is rising at stronger rates across all categories when compared to 12 months ago, with the exception of Nursing/Medical/Care.


Bernard Brown, Partner and Head of Business Services at KPMG, comments: “Once again employers seem ready to ‘splash the cash’ in what appears to be a desperate attempt to lure skilled staff from competitors.  Yet despite offering starting salaries at a rate that has not been seen during the survey’s 17 year lifetime, it is clear that candidates are not easily swayed.  As consumers they may be facing rising house prices and struggling to build financial reserves because of low interest rates, but the desire for extra disposable income is not yet translating into a generation of employees who are only loyal to their monthly pay cheque.

“It’s a message employers would do well to take to heart as, although many might argue that by offering higher pay packets, they are showing market confidence, the truth is that continued starting salary growth is unrealistic and unsustainable over the long term. Ultimately candidates are also suggesting this by voting with their feet, because we have also just witnessed the biggest fall in candidate availability for 17 years.  Perhaps this means that the productivity gap is being replaced with another chasm – a vacancy vacuum – and one that is unlikely to be resolved until employers recognise that, for staff, remuneration is about much more than take home pay.”

REC CEO Kevin Green said: “June saw record growth in starting salaries and yet another monthly increase in the number of people securing a permanent job.  However, this month sees the number of workers available to fill vacancies plummet to an all-time low, in particular across business development and sales roles that are vital to boosting bottom lines. There are also persistent shortages across IT and engineering, which are becoming a serious threat to economic growth.

“The message to UK businesses is that it is crucial to sharpen up hiring procedures in an increasingly candidate driven market.  The message to government is that we need to reform the visa system to satisfy immediate demand for skills, whilst stepping up measures to boost the UK skills base for the long-term.”

Full reports and historical data from the Report on Jobs are available by subscription. Please contact




For further information, please contact:

Mike Petrook, KPMG Press Office

T: 020 7311 5271

M: 07917 384 576


KPMG Press office: +44 (0)207 694 8773


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Jack Kennedy, Senior Economist

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Note to Editors:

The Report on Jobs is a monthly publication produced by Markit on behalf of the Recruitment & Employment Confederation and KPMG. The report features original survey data which provides cross-sector and pan-region analysis of the UK labour market, drawing on original survey data provided by recruitment consultancies.

The Report features original research data from Markit, collected via questionnaire from a panel of 400 UK recruitment and employment consultancies. In 2010/11, some 1,049,333 people were employed in either temporary or contract work through consultancies and 604,193 people were placed in permanent positions through consultancies. Data for the monthly survey were first collected in October 1997 and are collected at the end of each month, with respondents asked to specify the direction of change in a number of survey variables.

All Index numbers are calculated from the percentages of respondents reporting an improvement, no change or decline. These indices vary between 0 and 100 with reading of exactly 50.0 signalling no change on the previous month. Readings above 50 signal an increase or improvement; readings below 50 signal a decline or deterioration. Reasons given by survey respondents for any changes are analysed to provide insight into the causes of movements in the indices and are also used to adjust for expected seasonal variations.

Markit do not revise underlying survey data after first publication, but seasonal adjustment factors may be revised from time to time as appropriate which will affect the seasonally adjusted data series. Historical data relating to the underlying (unadjusted) numbers, first published seasonally adjusted series and subsequently revised data are available to subscribers from Markit. Please contact

A regional Report on Jobs series is now available comprising four regional reports tracking labour market trends across the Midlands, the North of England, the South of England and London. The reports are designed to provide a comprehensive and up-to-date guide to labour market trends and the data are directly comparable with the UK Report on Jobs.

About KPMG

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

About Recruitment and Employment Confederation

15 Welbeck Street, London, W1G 9XT. Tel: 020 7009 2100.   Fax: 0207 935 4112 Website:

The REC is the professional body representing the UK’s £24.6 billion private recruitment and staffing industry with more than 8,000 recruitment agencies and 6,000 recruitment consultants in membership. There are more than 1 million temporary workers registered with UK agencies who are deployed in industry, commerce and the public services every day.

About Markit

Markit is a leading, global financial information services company with over 3,000 employees.  The company provides independent data, valuations and trade processing across all asset classes in order to enhance transparency, reduce risk and improve operational efficiency.  Its client base includes the most significant institutional participants in the financial market place.  For more information, see

© Copyright in the Report on Jobs, including the Report on Jobs survey data, is owned by Markit Economics Limited. Distribution or storage including databasing by any means including, without limitation, electronic distribution is not permitted without the prior consent of Markit.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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