New KPMG Report Announces Increase in Starter Salaries | The Sterling Choice
We are a highly experienced recruitment agency within the Food, FMCG and Engineering sectors

Are we finally seeing realistic starting salaries come into play? Record rise reported.

After the worry and concern in the job market following the COVID19 outbreak, it’s only fair that we have a light at the end of the tunnel. While findings by the UK Government suggested that the labour market was recovering, we all knew that there was some way to go.

A recent report conducted by KPMG and the Recruitment & Employment Confederation has found that salaries for new starters has increased at their quickest rate for 24 years, alongside the number of permanent placements on offer.

The Report on Jobs stated that due to the easing of COVID19 related restrictions, there has been a robust demand for candidates across the jobs market. June was a record month with regards to the number of new starters in permanent roles, with July coming in with only slightly decreased figures, and subsequent months demonstrating the jobs market shows no signs of easing and recruitment agencies across the UK announcing vacancy growth continuing.

To underpin this further, data from the ONS indicates that the number of vacancies is up 153% compared to 2020, with the number of vacancies hitting 862,000 – the highest number seen since the three months to July – October 2018.

However, the labour supply is experiencing a shortage – is the wage increase a kneejerk reaction, and a band-aid rather than long-term solution? We discuss in detail.

 

And it’s not just permanent positions on the rise

The demand for short-term staff is also increasing at an impressive rate – reported as the fastest rise in the temp market since November 1997.

When it comes to temporary positions, the sectors with the strongest demand include engineering, secretarial and clerical, IT, finance and executive.

Retail saw the lowest rise in demand, which comes as no surprise when we considered the huge shift in online and e-commerce propositions in the retail sector. However, with the holiday season fast approaching, it’s likely we will see growth here – particularly when it comes to food retail.

Permanent roles are increasing– remember, we wanted British jobs for British workers?

Yes, demand for permanent employees is rising across the markets with engineering, IT, financial, blue-collar, secretarial and executive roles all experiencing serious vacancy growth.

But many can’t fill them.

What do we mean by ‘blue collar’? This subsection is particularly important when it comes to the food manufacturing and FMCG industries. Under this term falls roles such as those in production, refrigeration and warehousing, as well as drivers and logistics – could this be a shortage due to the fall out of Brexit? We’ve previously discussed at length the volume of migrant workers from the EU that made up the workforce for positions such as these – will we witness a short term solution here?

It seems almost comical that we are announcing a shortage of candidates for these positions when a resurfacing theme in the run-up to leaving the EU was, “stop taking our jobs”, and in response, 1.3 million migrant workers exited the UK.

However, now this shortage is causing an inconvenience the tune has changed to, “ ok, come back and take our jobs – but you must be gone before Christmas Day” – the underlying message being put forward with the pitiful 3-month visa’s on offer.

Our ability as a nation in making people feel unwelcome doesn’t end there. In response to the visa’s, a former lorry driver has spoken out about the lengthy process required just to get a HGV licence approved, and once it is, drivers can expect extremely poor (if any) facilities, unrealistic driving conditions and lacklustre pay.

Suddenly the goal of recruiting 5,000 new drivers by Christmas is slipping further away.

 

Not just blue-collar – total staff availability continues to decline

There is no secret among recruiters and hiring managers that there has been a decline in supply in both permanent and temporary, or contract, candidates, and as demand for staff continues, candidate availability is falling faster.

Ongoing concerns and uncertainty around the pandemic have led to hesitation when it comes to accepting a new role, while, as mentioned – Brexit is also a major factor in the job market. Declines are witnessed across all 4 regions in the UK, while the Midlands has been hit hardest when it comes to a drop in temporary workers.

We’ve worked hard is recent years to make sure that our recruitment service offers clients, and candidates, resilience. This means that although based in Cambridgeshire in the UK and North Carolina in the US, we have a national presence in both locations, sourcing and placing candidates right across the country.

Let’s talk about the increase in starter salaries

The report from KPMG and REC discussed the ‘record’ increase in starting salaries in the labour market, noting that it was the sharpest increase in starting pay for candidates since October 1997.

48% of recruiters are in agreement that starting salaries are higher, while only 1% said they witnessed them fall. When looking at this regionally, the midlands is the region that is leading the way, offering higher starting salaries than London, the South and North.

While ONS data showed employee earnings have risen by +7.3% on an annual basis, this has been followed by a statement that this was driven by a ‘compositional effect’ – a fall in the number and proportion of lower-paid positions since the beginning of the pandemic, and a comparison against a low base period.

 

The food & FMCG sector seems to be making strides

We are pleased to report that a number of our clients are finally starting to look at this and make impactful changes;  we’ve seen salary increases ranging from between 8-17% for a number of roles – specifically within engineering.

FTSE 100 companies were set to pay out more than £75 billion in dividends this year, up £15.2 billion compared to 2020, and this is set to increase by a further 4% in 2022. The food manufacturing and FMCG companies in this list include Associated British Foods, Coca Cola, Diageo, Morrisons, Ocado group, Sainsburys, Unilever and Tesco.

Are these companies prepared to eat into the dividends in order to retain key staff, let alone be classed as an employer of choice?

 

What does this mean for candidates?

Claire Warnes, Partner and Head of Education, Skills and productivity at KPMG UK, commented, “With salaries for new hires increasing at their quickest rate in 24 years and a sharp rise

in permanent placements in July, job seekers should be taking advantage of the buoyant

market to land their dream role.”

This is a great time to be looking for a new job. HOWEVER – if the starting salary really is exceptional, you need to think about long-term stagnation. What are the progression plans for the role at hand? How are further salary increases achieved? Are there other financial rewards on offer in this position?

Keep in mind that with the furlough ending, there will be some pressure on pay in the not-so-distant future.

While of course, money is a driving factor when it comes to changing roles or careers, but it is a small cog in a big wheel when it comes to job satisfaction and career progression. As well as investigating the above questions, it’s important to look at learning and development, and the company culture of a business.

 

And employers?

We are long-time advocates of paying employees their true worth, and not exploiting skilled and valuable candidates for as little as you can get away with.

Raising starting salaries is one sure-fire way to attract a higher volume of candidates to a position, and while this is a strategy that will help solve the issues businesses may be facing now – it doesn’t look like a solution that will provide dividends in the long-term.

Kate Shoesmith, deputy chief executive of the REC commented, “Pay increases alone, however, won’t solve the demand that has been building up over recent months. We need an immigration system that flexes to meet demand as was promised, and business and government need a long-term plan for skilling-up workers.”

If you are looking for a new role, or are experiencing the difficulties brought on by the labour shortage, speak to a member of our team to learn more about how we can help.

Request a callback

Looking to progress your career? Get in touch:

Find Job

107

Jobs are waiting you

Contact us

Subscribe us