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Langley James IT Recruitment Market Review – UK Wide – November 2018

December 7, 2018 . 9:00 am

Key points from the November survey:
– Softer increases in permanent placements and contract billings
– Vacancy growth edges down to 25-month low
– Contract pay rises at fastest rate since July 2007

Commenting on the latest survey results, James Stewart, Vice Chair at KPMG, said:
“Despite the uncertainty around Brexit, companies are still recruiting. It’s very much a candidates market at the moment and demand for workers is driving a sharp increase in starting salaries. It’s been getting harder and harder for firms to find good staff and with UK immigration policy likely to tighten, this trend isn’t going to get any easier. Concerns about a no deal Brexit are putting a handbrake on the supply of candidates as the
value of job security and stability shoot up people’s personal agendas. However, candidates who are prepared to take a chance and job hop can often bag a pay rise as a result. This is especially apparent in sectors like IT, engineering, hospitality and finance where quality candidates now come at a sizable premium.”

Recruitment & Employment Confederation Chief Executive Neil Carberry 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.”

Executive Summary

Slower rise in staff appointments
Permanent placements and contract billings both increased at softer rates in November. Though strong, the upturn in permanent staff appointments was the second-weakest since October 2017, while contract billings expanded at the joint-weakest rate for just over two years.
Vacancy growth edges down to 25-month low
Though elevated by historical standards, the overall rate of vacancy growth edged down to the least marked for just over two years in November. This was driven by a slightly softer increase in permanent job openings, as contract vacancies rose at a fractionally faster pace.
Candidate availability continues to tighten…
The overall availability of staff continued to decline sharply in November. This was despite the rate of reduction easing to the weakest since March, helped by softer falls in the supply of both permanent and contract candidates.
…leading to further upward pressure on pay 
Tight labour market conditions and greater competition for workers led to further marked rises in pay for both permanent and contract staff. Notably, contract wages increased at the quickest rate since July 2007. Permanent starting salaries meanwhile rose at one of the sharpest rates seen in the past three-and-a-half years.

Staff Appointments

Permanent placement growth edges down to four-month low
November survey data signalled a twenty-eighth successive monthly increase in the number of people placed into permanent job roles. The pace of expansion remained sharp, despite softening to the second-weakest since October 2017 (after July 2018). Growth was generally linked by respondents to robust demand for staff. However, there were also reports that uncertainty linked to Brexit and candidate shortages had limited the overall upturn in placements. Steep increases in permanent staff appointments were seen across three of the four monitored English regions, as the North of England registered only a modest rate of expansion.
Contract billings expand at joint weakest rate in 25 months
Recruitment consultancies signalled a further increase in billings received from the employment of contract staff during November. A number of panellists commented that clients had taken on short-term staff to support growing business requirements. Though marked overall, the rate of expansion was the joint-softest for just over two years (on a par with August). The upturn in contract billings was broad-based across all four monitored English regions. The Midlands saw by far the quickest rate of growth, while relatively modest expansions were registered elsewhere.

Vacancies

Demand for staff softens further in November
The Report on Jobs Vacancies Index edged down from 60.4 in October to a 25-month low of 60.2 in November. Nonetheless, the reading remained well above the neutral 50.0 value and continued to point to a historically strong increase in demand for staff.
Permanent and contract vacancies
Steep increases in vacancies were signalled for both permanent and contract job roles in November. Growth of demand for permanent staff remained slightly stronger than that for contract workers,  despite the former registering the softest pace of expansion for two years.
Public & private sector vacancies
November data pointed to rising demand for both private and public sector staff, though growth remained sharper for the former. The strongest increase in vacancies was seen for contract private sector staff, closely followed by permanent workers in this sector. In the public sector, short-term vacancies rose sharply, while demand for permanent staff expanded modestly.

Official Data: UK Job Vacancies
Latest official data from the Office for National Statistics (ONS) showed that vacancies expanded by 5.5% year-on-year in the three months to October. This was similar to the 5.4% rise seen over the third quarter. As a result, the total number of job vacancies stood at 845,000; the highest level seen on record.

Vacancies by Sector

Permanent vacancies
IT & Computing led a broad-based expansion of demand for permanent workers during November, closely followed by Engineering. Nonetheless, marked increases in vacancies were also seen in the remaining eight monitored categories.
Contract vacancies
All ten monitored contract staff categories noted increased demand during November. Blue Collar registered the steepest rise in vacancies, while the softest was seen for Executive/Professional.

Staff Availability

Candidate supply falls at softest pace since March
November survey data signalled a further marked decline in the overall availability of staff, despite the rate of contraction easing to the least  marked in eight months. Candidate supply has now fallen continuously on a monthly basis since May 2013. Permanent staff availability continued to decline at a quicker rate than seen for contract workers, though rates of reduction remained historically sharp in both cases.

Decline in permanent worker availability eases 
The supply of candidates available for permanent roles continued to fall in November. The rate of reduction was sharp, despite easing to an eight-month low. Survey respondents widely linked the latest decline in availability to a low unemployment rate and increased reluctance among candidates to take up new posts amid Brexit-related uncertainty. The Midlands registered the steepest fall in permanent candidate supply of all four monitored English regions, but marked declines were also seen elsewhere.
Slower reduction in contract staff supply
Recruiters signalled a slightly softer, but still marked, drop in the supply of candidates for short-term roles in November. This extended the current sequence of reduction to nearly five-and a half years. Uncertainty stemming from Brexit, tight labour market conditions and a greater preference for permanent roles among candidates were linked by panellists to the latest fall. All four English regions monitored by the survey recorded steep declines in contract candidate supply.

Pay Pressures

Starting salaries continue to increase sharply
Latest data signalled a further sharp rise in starting salaries awarded to permanent workers in November. This was despite the rate of inflation softening slightly for the second month in a row. According to panellists, low candidate supply meant that firms were having to offer higher rates of pay in order to attract and secure new staff. All four monitored English regions recorded historically marked increases in starting salaries, led by the South of England.
Contract wages rise at quickest rate in over 11 years
Recruitments consultancies signalled a sharp and accelerated rise in hourly rates of pay given to short-term workers in November. Furthermore, the rate of pay growth was the steepest seen since July 2007. Recruiters widely commented that candidate shortages and competition for workers had driven up wages in the latest survey period. The South of England noted the fastest rise in contract pay, though marked increases were also seen elsewhere.

Official Data: UK Average Weekly Earnings
Data from the Office for National Statistics showed that employee earnings (including bonuses) rose by 3.0% on an annual basis in the three months to September. This was up from a 2.8% expansion in the preceding three-month period, and the strongest increase in pay recorded for three years. Earnings data broken down by sector indicated that both the private and public sector recorded quicker earnings growth. Notably, public sector pay rose at the fastest rate in over seven years, having strengthened to 2.8%. In the private sector, pay rose at the fastest pace since the three months to November 2016, increasing by 3.1%.

Feature: International Comparison

UK unemployment rate in context
The latest labour market data published by the Office for National Statistics (ONS) showed that the UK unemployment rate stood at 4.1% in the three months to September. Although this was up fractionally from 4.0% in the preceding three months, it was still among the lowest recorded since 1975. This figure was also comfortably below the EU average of 6.7%, which was nonetheless among the lowest seen across the area since mid-2008.
Greece continued to register the highest jobless rate at 18.9%, though this was down from a peak of 27.9% following the global financial crisis. The unemployment rate in Spain also remains in double-digits (14.8%), though this was the lowest recorded since the end of 2008. Germany continued to see one of the lowest unemployment rates across the EU (3.3%), having fallen steadily since a post-crisis high of nearly 8%. At the same time, Japan and the US also recorded lower jobless rates than the UK, at 2.4% and 3.7% respectively, according to the latest data.

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.

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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