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Langley James IT Recruitment Market Review – London – November 2018

December 7, 2018 . 9:00 am

Key points from November survey:
– Permanent staff appointment growth accelerates…
– …amid strong upswing in vacancies
– Candidate shortages drive staring salary inflation to 42-month peak

Commenting on the latest survey results, Bina Mehta, Partner at KPMG UK said:
“The current employment situation in London is good news for job seekers but there are some worrying clouds on the horizon for employers who are facing a shortage of good candidates and a bigger wage bill in getting their vacancies filled. Employers in the capital are driving the sharpest salary inflation seen in over three years – great news for the economy and good news for the taxman, but an unsustainable situation for most employers,
particularly at an SME level where profitability drives growth.
“The forecast is not looking very positive for employers in London. A decline in overseas candidates is already being highlighted as one of the main factors for the fall in the supply of good quality staff in the capital and we expect this to continue to deteriorate over the coming months. As a business services hub it is people who drive the capital’s productivity and with employers facing the prospect of being unable to fill their vacancies – it could have a negative impact on our productivity levels and London’s economy as a whole.”

Neil Carberry, Chief Executive at the REC, said:
“Today’s report backs up what recruiters across the country are saying to us. Fewer people are willing to change employer and look for jobs in this uncertain climate, despite rising pay and jobs being available. Sectors like hospitality and warehousing are facing particular challenges in the run-up to Christmas.”

Staff Appointments

Marked upturn in permanent staff appointments
November data showed a fourth successive monthly rise in permanent placements across the capital, which recruitment consultancies linked to robust demand for staff. Moreover, the rate of expansion accelerated since October and was above its long-run average. Permanent staff appointments also rose across the UK as a whole, albeit at a soften pace than in London.
Contract billings growth at three-month low
Although contract billings in London continued to expand in November, growth lost momentum. The rise was moderate in the context of historical survey data and the weakest in three months. Panellists that signalled higher contract billings cited greater client numbers. At the national level, contract billings growth remained sharp despite also easing since October.
Job Vacancies 
Latest data continued to point to vacancy growth in London. Demand for permanent workers strengthened from October’s four-month low and was quicker than seen across the UK as a whole. Contract vacancies also expanded at a quicker pace, one that matched the UK average.

Staff Availability

Downturn in permanent staff supply eases
Lower unemployment, fewer candidate numbers and a reluctance among workers to switch jobs reportedly led to another deterioration in permanent staff availability in London. However, the rate of reduction moderated to the slowest in one year and was softer than across the UK as a whole.
Slower fall in contract worker supply
November data highlighted another decrease in jobseekers willing to take part-time jobs in the capital, stretching the current sequence of reduction to sixty-four months. Companies mentioned a hesitancy among workers to move jobs and a decline in overseas candidates as the main factors causing the latest drop. Although sharp, the contraction softened from October. 

Pay Pressures

Starting salary inflation ticks higher 
A combination of candidate shortages, strong demand for staff and counteroffers led to a further increase in starting pay for permanent workers in the capital. Moreover, the rate of salary inflation was sharp and the strongest in three-and-a-half years. The rise in London was similar to that noted at the national level.
Robust increase in contract pay
Contract pay rates continued to increase midway through the final quarter of 2018, but the rate of wage inflation moderated to a three-month low. Nevertheless, the rise was sharp and above the average for the 21-year survey history. Competition for workers and skill shortages were the main factors leading to upward pay pressures, according to recruitment consultancies.

Official Data: UK Average Weekly Earnings
Latest data from the Office for National Statistics showed that average weekly earnings across the UK increased by 4.2% on an annual basis over the third quarter of 2018. The East Midlands posted the strongest year-on-year
rise in pay, up 7.4% to £554. The steepest fall was meanwhile seen in the North East, where weekly earnings were down -6.4% compared to a year ago to £494.

Regional Comparison

Staff appointments
Permanent staff placements continued to rise markedly across the UK in November. However, the rate of expansion was the slowest since July and the second-weakest recorded in 2018 so far. The softer performance was driven by slower increases in the North and South of England, with the former recording only a marginal upturn that was the joint-softest since April 2013. Contract labour supply also contracted at a slower pace in November, registering the softest decline for three months. However, the drop was still historically marked and sharp overall. At the regional level, the quickest fall was recorded in the Midlands, and the slowest in the North of England.
Candidate availability
At the UK level, permanent staff availability fell for the sixty seventh month in a row during November. Rates of contraction remained sharp in all four covered English regions. That said, the overall pace of decline was the softest since March, with both London and the South of England registering slower falls compared to October. Contract labour supply also contracted at a slower pace in November, registering the softest decline for three months. However, the drop in contract staff availability was still historically marked and sharp overall. At the regional level, the quickest fall was recorded in the Midlands, and the slowest in the North of England.
Pay Pressures
November data pointed to a further sharp rise in starting salaries for permanent staff in the UK. This was despite the rate of growth easing to a three-month low. Faster rises in London and the South of England contrasted with slower increases in the Midlands and the North of England. Contract pay rates across the UK increased at the fastest pace since July 2007. Stronger rates of wage inflation were seen in three of the four monitored English regions, with the steepest rise seen in the South of England. London was the only location to report slower growth. However, the deceleration was fractional, and the increase still sharp overall.

About Langley James
Langley James was founded in 1999 by James Toovey, a highly respected recruitment industry professional.  James wanted to provide something unique: a bespoke recruitment service which was founded on service excellence.  With offices in London and Chester, we are now providing our recruitment services throughout the world and over the last 18 years have worked with some of the most respected companies.

The average time form taking a role…
– and Delivering a Qualified Shortlist of Candidates          3 days
– and First Confirmed Interview                                             5 days 
– and Confirmed Placement                                                     8 days

To find out why so many companies turn to Langley James for support in fulfilling their IT recruitment needs, call and speak to one of our specialist consultants today on 0207 788 6600.

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