Drop in candidate availability is driving up salaries

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The pool of potential employees continues to fall at an alarming rate, forcing companies to offer higher starting salaries and more creative reward packages, according to the latest Recruitment and Employment Confederation (REC)/KPMG Report on Jobs.

Released today, the report shows that 37.7% of employers had fewer candidates available to them than in the previous month, in what is increasingly becoming a candidate-driven recruitment market.

When you factor in the number of employers who reported having more candidates available and those who said it was the same, it gives a net score of -25.5%, which is down slightly from -24.5% in March, and a big jump from -3.2% in January. 

For temporary workers and contractors, the net score is -22.9% for April, down from -18.5% in March and +2.3% in January. 

Based on the same methodology, the net score for the level of permanent starting salaries employers are offering is +30.1 in April, up nearly 5 percentage points from +25.3% in March, and much higher than the +18% reported in January. Contractor pay rates have increased at a steady rate throughout the year. The net score was +12% for April, up from +8.7% in March, but only a slight overall increase from +11.4% in January.

REC director of policy and professional services Tom Hadley told HR magazine that employers are learning to be more flexible in their approach to hiring, with recruiters having to “manage their expectations” around recruitment times and availability of suitable candidates. 

“Over the last few years, hiring managers have been used to getting people in within a week or two and with relatively little effort,” he said. “That’s not the case anymore. Now they’re having to be proactive in their approach, maybe look at their recruitment processes, and realise this is a candidate-driven market.”

Hadley added that businesses may have to accept candidates who do not fit all of their criteria immediately, but who can be trained up to perform their role effectively. 

Bernard Brown, partner and head of business services at KPMG, warned that employers ignore the increasing number of candidates who are new to the market “at their peril”.

“Not acknowledging what they have to offer continues the very real risk of losing a generation of talent,” he said. “It makes no business sense, because without a blend of youth and experience the workplace will no longer reflect the marketplace.”