City firms pay higher wages as labour market hots up

City workers
City firms are on an employment drive as the economic recovery takes hold, according to recruiters Morgan McKinley.

Growing demand for staff means finance businesses are paying higher salaries to attract the best workers.

Vacancies were 18 per cent higher in August compared to the same month last year and salaries for new jobs grew 17 per cent.

Demand was particularly high for accountants and risk analysts as firms adjust to new regulations.

However, the boom in hiring is making it difficult for some firms to find the staff they need, according to analysts at EY.

The professional services firm found 83 per cent of entrepreneurs want to hire more staff, but 77 per cent are bumping up against a shortage of skilled workers.

This may indicate the labour market is hotting up, which could push up wages and convince the Bank of England to increase interest rates in order to act on price pressures.

Meanwhile the Business, Innovation and Skills select committee of MPs called for a new programme to boost literacy and numeracy among low skilled unemployed workers.

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