Pay growth has slowed to its lowest rate in over two years, new survey figures show this morning.
The slowdown comes despite an increase in job vacancies in December, according to the data compiled by the Recruitment and Employment Confederation (REC) and financial services firm KPMG.
The survey’s pay gauge slid to a score of 58.7 from 61.3 the month before. Figures above 50 signal an increase over the month, but December’s score implies a smaller increase.
The number of vacancies grew at a faster pace than in November, indicating higher demand for staff. It is at historically high levels with the index at 62.2 up from 61.2.
Despite the number of opportunities going up, the pace of hiring eased slightly compared with the previous month, with the hiring index for permanent staff falling to 55.5 from 57.1. Growth in the availability of permanent staff remains deep in negative territory, with the score for availability scoring 35.1. IT and computing professionals were the most in-demand workers for permanent placements, up from third place a year ago.
“The UK labour market is in great shape at the start of 2016, but some major challenges lie ahead,” said REC chief executive Kevin Green.
“Skill shortages are a real threat to continued growth in many industries. With talent at a premium, employers will try to attract staff by increasing starting salaries.
“On general wage growth, as many businesses align annual pay rises to the rate of inflation, we anticipate that growth will remain at 1.5 to 2.5 per cent.”
Officials at the Bank of England have aired concerns over pay growth, and said they would not be tempted to lift interest rates until it became more robust.