Hampered Hiring: KPMG and the REC Report on Candidate Shortages​


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By Robyn Ma​


The Story

Accountancy firm KPMG and the Recruitment and Employment Confederation (REC) have recently released a report on UK labour shortages, covering the impact of the Covid-19 pandemic on Britain’s employers – who are currently facing the worst staff shortages since the late 1990s (The Guardian). This has led to a 'softer' rise in hiring and increased starting salaries.

Although there has been a rise in hiring activity, this has been hampered by candidate shortages. Total vacancies, including both permanent placements and temporary billings, have continued to swell. The combination of job-seeker scarcity and increased demand for staff has inflated rates of starting pay. Notably, they have “increased at the quickest rates seen in over 24 years of data collection” (Markets Insider).

On a positive note, unemployment in the UK has dropped to 4.7% in recent months (The Guardian). The main sectors struggling with recruitment are construction, hospitality and catering, and manufacturing.

What it Means for Businesses and Law Firms

Brexit, Covid-19, and the hesitancy for employees to switch to new roles appear to be behind the labour shortages (Markit Economics). An estimated 1.3 million non-UK workers left the country during the pandemic (Financial Times). With fewer foreign workers travelling to Britain due to “Covid-19 border controls and post-Brexit immigration rules”, employers are struggling to fill the labour gap (The Guardian).

The result is low business output growth. Higher wages and rising energy costs have contributed to inflation, which is at its highest since April 2017 (Proactive Investors). Moreover, consumers are witnessing the impact of rising fuel and energy prices, which may lead to a decrease in discretionary spending. This may slow down the recovery of the UK’s economy.

Deputy CEO of REC Kate Shoesmith says that post-Brexit immigration rules need to address these labour shortages, while also investing in skills and training for employees so that feel confident in their abilities (Markit Economics). This could also increase the number of domestic candidates, as the promise of higher pay alone doesn't appear to be enough to attract workers.

Shoesmith urges the government and businesses to invest in “reskill[ing] and upskill[ing] furloughed and prospective workers” to address the skills gap in the workforce (Markit Economics). As society begins to adapt to a post-Brexit and post-pandemic world, job seekers will need to feel valued in their skills and abilities across all sectors. Growth, for many businesses, is directly linked to employee satisfaction and retention.

The fight for the best talent is keenly felt within the legal industry. With transactional sectors booming, UK law firms are raising salaries to compete with US firms. Meanwhile, those US firms are offering eye-watering golden handcuffs to retain staff.