UK employers are being hit hard by labour shortages giving new starters the upper hand when it comes to negotiating pay.
A September survey by the Recruitment and Employment Commission (REC) found that nine in ten employers, some 88 per cent, said their biggest concern for the rest of the year was labour shortages.
Amid a labour squeeze the REC and KPMG found that starting salaries for permanent and temporary workers have climbed by record levels, prompting the highest wage increases in the survey’s 24-year history.
Claire Warnes, Head of Education, Skills and Productivity at KPMG UK warned that “while higher salaries are good for job seekers, wage growth alone is unlikely to help sustain economic recovery because of limited levers to bring people with the right skills to where the jobs are and increase productivity.”
“We have all seen how labour shortages have affected our everyday lives over the past few weeks, whether that’s an empty petrol station or fewer goods on supermarket shelves,” REC Chief Executive, Neil Carberry said.
It comes as the UK faces an acute shortage of road transport drivers which have caused serious disruption to the supply of food and fuel. The crisis has been exacerbated by Brexit which has caused an estimated 500k EU workers, who made up 11 per cent of heavy goods vehicle drivers, to leave the UK.
Carberry urged the government to loosen post-Brexit immigration rules, improve skills training and to work with businesses to help ease shortages. “It is essential that government works in partnership with business to deliver sustainable growth and rising wages, rather than a crisis-driven sugar rush,” he said.
Regional data indicated that the North of England saw the steepest increase in permanent staff appointments, while the slowest upturn was in the Midlands.