Starting salaries rise as firms compete for staff

WAGES are rising at an “unprecedented” rate due to a “severe” shortage of workers across the South West, a new report reveals.

The latest KPMG and REC, UK Report on Jobs: South of England survey revealed a further surge in hiring activity across the West Country in September 2021.

The number of people finding permanent jobs grew at the quickest rate since the survey began in October 1997, driven by greater economic activity at companies and stronger demand for staff.

And growth in the number of people finding short-term posts also remained sharp. But there were reports of candidate shortages curbing overall growth. Those candidate shortages remained severe, with staff supply falling at a near-record pace, driving unprecedented increases in both starting salaries and temp wages.

Adjusted for seasonal variation, the Permanent Staff Availability Index remained well below the neutral 50.0 level to signal a further severe drop in the supply of permanent workers across the South West.

Although easing from August’s survey record, the rate of deterioration was the fourth-quickest in the series history and exceeded the national average.

The supply of candidates for temporary roles in the region fell for the seventh straight month in September. Greater demand for staff, fewer EU workers and a general shortage of skills were all cited by recruiters.

Meanwhile, recruitment consultancies in the region signalled a further increase in salaries awarded to new permanent joiners in September. Notably, the rate of wage inflation quickened to a new series record for the third month running. Greater competition for scarce workers and efforts to attract job applicants were key drivers of the latest increase in pay.

Ian Brokenshire, senior partner for KPMG in the South West, said: “The record rate of permanent appointments during the last month clearly offers cause for optimism among businesses and jobseekers alike, as the South looks to leave the employment struggles of the pandemic behind. It remains to be seen, of course, what impact the recent end of the furlough scheme will have on firms’ hiring intentions.

“And, following another month of declining worker availability, the region’s businesses will need to continue to show resilience until a balance between demand and supply is restored, hopefully sooner rather than later.”

Neil Carberry, chief executive of the REC, said: “Demand for workers continued to grow last month, while staff availability fell at a near record pace. Competition for staff has led to the fastest growth in starting salaries since this survey began – not just in logistics and food processing, but in white collar professions as well. But we have all seen how labour shortages have affected our everyday lives over the past few weeks, whether that’s an empty petrol station or fewer goods on supermarket shelves.

“The scale of the shortages we are seeing cannot be explained by one factor alone, but are a major challenge to businesses’ ability to drive the prosperity of the UK in the months and years to come.”