Businesses are being forced to hike pay at the fastest pace on record to lure talent amid severe worker shortages.
Hot competition for fresh staff, compounded by a paucity of available candidates, has led to employers raising starting salaries at the steepest rate since records began, research by KPMG and the Recruitment and Employment and Confederation (REC) has found.
Swelling staffing costs come as businesses are taking heavy fire on their margins from rising raw material and energy prices.
A looming 1.25 percentage point national insurance hike, in addition to the corporation tax rate climbing to 25 per cent, is set to intensify the cost onslaught businesses are absorbing.
Kate Shoesmith, deputy chief executive of the REC, said: “Starting salary growth has reached another record high as shortages continue to bite and companies compete to hire the staff they need.”
The record pay print will agitate officials at the Bank of England, who voted yesterday to leave rates at a record low 0.1 per cent.
The Old Lady has warned that inflationary pressures emanating from the labour market could trigger a wage/price spiral and damage the UK’s economic health.
The pool of available workers shrank at one of the fastest rates since REC and KPMG started tracking the data.
“Reduced candidate availability was often linked to a combination of high demand for staff, general labour shortages, fewer foreign workers and hesitancy among employees to switch or seek out new roles,” the report said.
A paucity of workers weighed on hiring activity.
Appointments of permanent and part-time staff dipped to its lowest level in half a year.