UK employers increased the number of new staff in May at the slowest pace since early 2021 after a steep fall in the number of workers responding to job adverts.
After an increase in job switching by workers last year, often to secure higher pay, employers said the shortage of candidates since January meant they were unable to fill thousands of vacancies.
The permanent jobs index fell to 59.2 from a peak of 72.7 last August, where a figure above 50 indicates growth.
The survey by the Recruitment and Employment Confederation (REC) and KPMG shows how tight the UK labour market has become during the coronavirus pandemic. About 500,000 people have quit the labour force, many through ill health, since 2019.
While workforces in France and several other European countries have expanded compared with pre-pandemic levels, the UK’s shrinking workforce has left employers scrabbling to find skilled and unskilled workers to fill job vacancies.
Job vacancies declined in May for a third consecutive month, but only modestly to remain near record high levels, the REC said.
Employers seeking IT and computing staff posted the strongest increase in demand for permanent staff in May, the REC said, followed by employers in the hotel and catering industry.
The hospitality industry was among those hardest hit, although the recent disruption at UK airports has highlighted how airlines and airports, which laid off thousands of workers during the first two lockdowns, have struggled to recruit enough staff to meet the demand for flights this summer.
The report, which is compiled by S&P Global, was based on responses from about 400 UK recruitment and employment consultancies.
Claire Warnes, a spokesperson for KPMG UK, said: “For over a year now, we have seen a sustained mismatch in the growing numbers of vacancies in every sector of the economy against the inadequate supply of skilled candidates.”
She said it was possible the figures showed employers were beginning to rethink their growth plans now that skills shortages were proving difficult to fix.
Data for the main regions in England showed that demand for staff in the private sector continued to outpace that seen in the public sector during May, with London the driving force in the search for new staff.
Neil Carberry, the chief executive of the REC, said the large number of people who have left the labour market was a headache for employers that the government should help resolve.
“Growth is essential to funding public services and paying higher wages sustainably. Any plan for growth must include action to help people into work from inactivity, skills reform, support for innovation on productivity and targeted immigration reform,” he said.
