British business demand for staff was the highest for nearly two years in May, at the same time as a drop in candidate numbers, according to a survey of recruiters.
Demand for staff rose at its fastest rate since August 2015 both in London and in the UK as a whole, according to an index measuring job vacancies from the Recruitment and Employment Confederation (REC).
The increased number of job vacancies contributed to the fastest expansion in the number of people placed in permanent roles for more than two years, as firms hurry to snap up any available staff.
The number of candidates vying for new roles fell at the quickest pace since August, with more than 40 per cent of survey panellists saying the availability of candidates had decreased.
The shortage of candidates has caused alarm for employers looking to recruit skilled workers, particularly ahead of an election in which the two main parties are both committed to stopping freedom of movement for EU workers after Brexit.
“Employers seeking to fill vacancies are running out of options,” said Tom Hadley, REC director of policy.
“Whichever party forms the next government must focus on improving the employability of our young people and boosting inclusion for underrepresented groups. Alongside this, these figures clearly show that in many sectors we need more, not fewer people so that businesses can grow and public services continue to deliver.”
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Unemployment is currently at 4.6 per cent, according to the Office for National Statistics, its lowest level since 1975. Yet the Bank of England expects unemployment to fall further, to hit 4.5 per cent, before all of the slack in the labour market is taken up.
Theoretically this should mean there is some way to go before the demand for staff increases pay offers, although there is some evidence that some sectors, including engineering and financial services, are already seeing salaries for highly skilled workers increase.
REC’s survey shows salary inflation rose in February and May at the joint-highest rate in more than a year.