Professional services firms in the UK have warned of growing “white-collar” labour shortages as businesses fight it out for top talent amid the economic recovery from the coronavirus crisis.
Some City of London firms have even started to turn away work due to a lack of staff, according to business leaders.
Attempts by professional services firms to poach rivals’ staff are unleashing sharp rises in pay across the industry, said executives and headhunters.
The UK labour market is heating up after the lifting of most coronavirus restrictions, with the number of job vacancies in the UK rising above 1m for the first time on record in the three months to August, according to official data released last month.
Data compiled by KPMG and the Recruitment & Employment Confederation showed that appointments to permanent roles hit a record high in August, as a big drop in candidates drove sharp increases in pay.
While much attention has recently focused on shortages of lorry drivers that contributed to petrol stations running out of fuel and gaps on supermarket shelves, there is also a lack of workers for many office-based roles as the economic recovery increases demand for labour.
This has meant accounting, consulting and law firms are increasingly fighting over the best available candidates, with a similar picture in financial services and the technology industry.
“If you are a talented candidate within the white-collar field, whichever market you’re in, if you’re good, you are in high demand . . . it’s all just red hot,” said Nick Kirk, regional UK managing director at white-collar recruitment business Michael Page.
Hywel Ball, UK managing partner at accounting firm EY, said the two factors driving the recruitment market were competition for staff between professional services businesses and increased demand from companies for in-house expertise as the economy rebounds from the Covid-19 pandemic.
EY, one of the Big Four accounting firms, competes with Deloitte, KPMG and PwC, as well as smaller rivals.
One lawyer, who was recently poached by a City firm, said she had been receiving several calls a day from headhunters. She eventually agreed to move last month in return for a big increase in her salary and a step up in seniority.
The lifting of Covid restrictions, including work from home guidance, has encouraged some people to change jobs because they can now meet prospective employers face to face. The “merry-go-round” of job moves is speeding up, according to business leaders.
Demand for workers is so high now that the top job being advertised on LinkedIn is for recruiters to find candidates to fill vacancies.
Toby Fowlston, chief executive at white-collar recruitment business Robert Walters, said he was witnessing shortages of candidates for jobs. “I’ve been in this industry for 22 years and I can safely say it’s one of the most positive job markets that I’ve seen in the UK,” he said.
Kirk said some workers were reluctant to change employers, creating an “almost perfect storm for employers . . . they’re looking for talent, but a lot of it is still sat on its hands, waiting for just a little bit more certainty” as the pandemic persists.
But other staff have been willing to switch as the pandemic served to loosen ties between companies and employees because many office-based workers operated from home.
“Working from home has meant that people can simply pick the biggest wage rather than need to worry about where they are travelling to,” said the boss of one large audit firm.
Business leaders said the supply of potential candidates for jobs had also been hit by Brexit, with many overseas workers previously based in the UK returning to their home countries.
Paul Eagland, managing partner at BDO, the UK’s fifth-largest accounting firm, said his firm had experienced “a significant increase in work and revenues” since the end of most recent lockdown restrictions.
Strong growth in areas such as mergers and acquisitions and forensic accounting had “exacerbated the war for talent”, he added.
BDO increased its staff bonus pool by 36 per cent to £19m for the year to June as a result. Pay at other accounting firms has jumped to record levels, with Deloitte’s 691 partners receiving more than £1m each on average in the past year.
Consulting firms are hiring quickly in fast-growing sectors such as data science, cyber security and software development.
Tamzen Isacsson, chief executive of the Management Consultancies Association, a trade body, said there was a “fierce war for talent” brewing in the industry.
Consulting firms’ clients were seeking advice on how to reorganise their businesses in the hope the worst of the pandemic was over, she added.
Strong demand from clients across multiple areas, including M&A work, has also created an urgent need for staff at law firms.
Pay is rising fast as a result. Pay deals including bonuses have climbed to record highs for some at the law firms, including the so-called magic circle: Allen & Overy, Clifford Chance, Freshfields Bruckhaus Deringer and Linklaters.
The pay of newly qualified lawyers has increased sharply due to a frenzied war for talent in recent months. Linklaters in September announced its second pay rise for these staff in three months, taking their starting salaries to £107,500. Slaughter and May in July raised salaries for newly qualified lawyers to £100,000.
“I don’t think I’ve seen a market like this,” said Kirk. “It’s pretty much as extreme as it’s ever been.”
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