Wages rise sharply with workers in high demand
BUSINESSES are facing their toughest recruitment market for 20 years as workers’ ability to shop around for roles drives up wages.
Starting salaries for permanent workers maintained a sharp upward trend in October. Wage inflation for new workers was close to a three-anda-half-year high, and many companies reported having to boost pay offers to attract staff, according to research from KPMG and the Recruitment & Employment Confederation (REC).
The figures tally with official data from the Office for National Statistics (ONS) showing employee earnings rose by 3.1pc in the 12 months to August, the fiercest growth seen since 2009.
The findings come as unemployment reaches its lowest level in four decades. It is set to fall below 4pc by the end of the year, according to projections from the Bank of England. The REC’s index of job vacancies reached 57.4 in October on a range where any score over 50 indicates growth. This was a rise from 56 in September.
However, while firms were struggling to find staff, the rate at which new jobs were created hit a two-year low. The REC survey also showed staff shortages remained particularly acute in technology and healthcare.
James Stewart of KPMG said: “With the jobs market so heated, businesses across the country, of all types, are struggling to find work-ready staff.”
He said a “dwindling supply of EU workers” was making it more costly for firms to hire good candidates.
“Consequently, we’re seeing wages pushed upwards and a trend of canny workers job-hopping to secure a pay rise rather than remaining loyal to their existing employers,” he added.
The UK’s future access to migrant workers in order to meet rising demand from its companies was also flagged as a concern by the Bank of England in its November Inflation Report.
David Owen of Jefferies said: “Skilled migration can be productivity enhancing. This leads to the right sort of wage growth.
“The impact of less skilled labour coming into the UK will be something they [the Bank of England’s policymakers] have to think about.”