Pay and demand rise for skilled workers

Wednesday 15 April 2015

The latest Report on Jobs from KMPG and the Recruitment and Employment Confederation (REC) has shown the environment for skilled contractors in England remains a largely positive one, with notably high levels of demand and staff appointments, based on data collected for the month of March.

Salary growth was found to be at its fastest in six months, which seems to be chiefly caused by high demand for skilled professionals. Pay for temporary workers and contractors also continued to rise, but not quite as quickly as in February.

The level of supply for permanent staff positions dropped at the sharpest rate seen for four months, while that for temporary employees fell at its fastest rate since last October, raising concerns of a potential skills shortage.

Bernard Brown, partner and head of business services at KMPG, said: “This tightening labour market is forcing up wage inflation as businesses bid for the best talent.”

Despite the low availability observed in the report, the number of available staff positions was also at its highest level for five months. Interestingly, the private sector continued to offer more staff appointments than the public sector across the country, although public sector shortages remain the most acute.

This combination of factors means that the present labour market offers rich pickings for contractors, as companies that are unable to fill vacancies with permanent staff may well find their best option is to rely on highly skilled, self-employed workers.

Andrew Fahey, commercial director at Brookson, said: “A strong and positive labour market is a great opportunity for contractors to develop their prospects within their sector, as necessity may help introduce a broader range of clients to the benefits of working with freelancers.”


The industry with the highest demand for permanent staff was found to be engineering, closely followed by finance. For temporary positions, the biggest gap in demand and supply was found in medicine.

Of course, there is significant variation within the regions of England. However, some trends are consistent on a national level, such as a growth in the number of new staff appointments. This was observed across England, with the biggest increases recorded in the south-east and the Midlands.

It was also in the Midlands that the most substantial growth in temporary appointments through recruitment agencies was recorded, which could be an area in which contractors can offer significant competition, by effectively cutting out the middleman.

Kevin Green, the chief executive of the REC, said: “Labour market fluidity is returning - candidates are more confident about looking for work, and there are opportunities to earn more for those that do. Employers need to realise that people are deciding to change jobs because they can earn more than in their current job.”

He added: “Increases in starting salary offers are being driven by skills and talent shortages across the economy, and businesses are going to have to think hard about retaining scarce resources.”
Overall, the position for workers across the English labour market is improving, which will come as welcome news for all after years of stagnation and recession.

By Victoria McDonnell

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