The availability of permanent workers and temporary and contract staff across the UK fell in May when compared to the previous month, according to the latest Report on Jobs from IHS Markit/REC (Recruitment and Employment Confederation).

This fall in the availability in staff coupled with high demand for staff has led to an increase in starting salaries for permanent as well as temporary and contract staff.

Demand for temporary staff rose across the ten monitored job categories in May 2018 when compared to last month. Demand was for temporary staff was led by the blue-collar and engineering sectors. Engineering was the highest-performing sector for permanent staff demand.

Data from the REC also showed that the growth of vacancies for permanent staff continued to outpace that seen for temporary roles. May data also showed that demand for private sector staff continued to increase at a steeper rate than that for public sector workers.

Permanent candidate numbers fell at the fastest rate for four months, while short-term staff availability decreased at the quickest pace since last November.

Meanwhile, permanent staff appointments continued to rise at a strong pace, despite growth softening to a five-month low. Recruitment agencies registered the strongest increase in temp billings for five months in May. Strong demand for staff and, in some cases, a lack of available permanent staff, contributed to the latest increase in temp billings, according to the REC.

“Despite growth in demand for staff this month, we have seen another severe drop in staff availability,” REC director of policy Tom Hadley said. “While it is encouraging to see a rise in staff appointments for permanent and temporary staff, indicating that employers are feeling confident in making hiring decisions, a lack of candidates remains a major challenge for recruiters - particularly in areas like nursing, engineering, manufacturing and IT. Staff shortages are becoming business critical in many of these key sectors.”

“Because of the lack of candidate availability we are seeing employers paying higher salaries to attract the right people,” Hadley said. “This is only part of the solution, with employers also having to think about providing a more flexible working environment and progression opportunities. With skills needs and candidate expectations continuing to evolve, employers are having to radically re-imagine their hiring procedures.”