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UK starting salaries rising at increasingly rapid rate

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The wage increase coincided with continuing staff placements as the number of job vacancies reached a five-month high in March, with recruiters expanding opportunities for permanent and short-term workers.

Seemingly permanent staff are reaping the benefits in the wage spike, however, as average starting salaries for people placed in the fixed job roles increased, while hourly rates for temporary/contract staff rose at a slower pace than February, the results showed.

There is a shortage of talent on the market though, as the supply of candidates fell at the sharpest rate in four months, while the availability of temporary staff fell at the quickest rate since October.

Kevin Green, REC chief executive, said: “Almost a third of recruiters say that starting salaries have increased in comparison to last month, and we’ve seen another increase in the number of people that have found a new job via a recruiter.

“This suggests that labour market fluidity is returning – candidates are more confident about looking for work, and there are opportunities to earn more for those that do. Employers need to realise that people are deciding to change jobs because they can earn more than in their current job.

“Increases in starting salary offers are being driven by skills and talent shortages across the economy, and businesses are going to have to think hard about retaining scarce resource. 

“As politicians debate skills, education and immigration in the run up to the election, we hope they recognise the potential impact of this skills crisis, because a lack of workers to meet demand threatens the sustainability of our economic growth.”

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Elsewhere, the data found permanent jobs growth was strongest in the Midlands and the South, while Midlands agencies also experienced the fastest rise in temporary positions. 

Sectors with the highest demand of permanent positions included engineering, accounting & financial, and executive & professional. Comparatively, the most increased demand for temporary staff happened in the nursing, medical & care sectors, followed by blue collar staff.

“Recruiters are struggling with industry-wide skills shortages, as demand for talent continues to outstrip the number of candidates seeking work. This pervasive skills shortage could put the brakes on economic growth if it continues unabated,” said Bernard Brown, partner and head of business services at KPMG.

“Nervousness in the run up to the election could be one factor seizing the market, as candidates seek certainty before leaving the safe haven of their current role. This tightening labour market is forcing up wage inflation as businesses bid for the best talent. 

“Such a trend could cause a two-tier pay market, creating a significant divide between highly paid new starters and current employees receiving subdued pay increases. This dynamic will cause businesses problems in the long term as they struggle to keep hold of talented staff increasingly dissatisfied by their remuneration packages.”

Image via Shutterstock.

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