A shallower pool of available workers and growing calls among staff for employers to lift pay to offset the cost of living crunch is stoking wage tension in the jobs market, reveals fresh figures released today.
Intensifying pay pressures in the jobs markets adds to the growing body of evidence indicating historically high inflation could become embedded in the UK economy.
The Bank of England has persistently warned the cost of living could continue to spiral if rising wages are not offset by productivity gains, prompting businesses to hike prices and creating an inflation feedback loop.
The volume of candidates available to take on roles shrank over the last month, with KPMG and the Recruitment and Employment Confederation’s (REC) index of staff availability dropping to 35.1 in January from 37.6 in December.
London suffered a steeper drop in candidate availability, with the capital’s permanent staff availability index dipping to 33.1 from 41.5 over the same period.
A paucity of workers is ramping up competition between firms to secure staff, causing them to hike starting pay.
Pay awarded to new starters rose at the third fastest pace since records began in October 1997, KPMG and the REC said.
Neil Carberry, chief executive of the REC, said: “With competition for staff still hot, companies are having to raise pay rates for new starters to attract the best people.”
“And the cost of living crisis means there is also more pressure from jobseekers who want a pay rise,” he added.
Although the fresh figures will alarm officials at the Bank, they will provide hope for Brits who are facing the worst cost of living crunch in a generation.
A combination of inflation peaking at 7.25 per cent in April, a 1.25 percentage point national insurance hike and a 54 per cent uplift to households’ energy bills are set to erode Brits’ living standards this year.
Governor of the Bank Andrew Bailey last week sparked fury when he pleaded with workers to temper pay rise demands in a bid to quash inflationary pressures in the UK economy despite Threadneedle Street forecasting the worst drop in Brits’ living standards this year since comparable records began in 1990.
Carberry urged the government to scrap the national insurance hike to avoid disincentivising businesses from increasing investment spending.