Strong competition for workers amid a tight jobs market is accelerating starting pay at near record highs, reveals a fresh survey published today.
A shortage of available workers is driving businesses to hike pay to out muscle competitors from poaching top talent, according to research from the Recruitment and Employment Confederation (REC) and KPMG.
Starting pay rose at the second quickest pace on record, caused by “demand for staff far [exceeding] supply, as well as efforts to attract applicants,” the organisations said.
Intense wage pressures in the labour market will raise concerns at the Bank of England, who have warned rapidly rising wages could lead to high inflation being embedded in the UK economy over the long-term.
Governor Andrew Bailey last month ignited fury when he asked workers to hold off on demanding higher pay in a bid to ward off price rises.
The cost of living is currently running at the highest level in nearly 30 years, hitting 5.5 per cent in January, according to the Office for National Statistics.
Permanent staff availability in London is dropping at the quickest rate in the country.
Neil Carberry, chief executive of the REC, said: “Candidate availability has now been dropping for a year, which shows the scale of the labour shortage the UK faces.”
“Recruiters are filling record numbers of posts, but demand is still rising,” he added.
Hundreds of thousands of Brits have dropped out of the jobs market, including younger workers who have stayed in education until the economy regains its pre-pandemic strength and older workers taking early retirement.
Meanwhile, businesses are scrambling to ramp up staffing levels to capitalise on a resurgence in demand after Covid-19 curbs were rolled back.
These dynamics have generated severe supply and demand imbalances in the jobs market, putting upward pressure on wages.
Despite a scarcity of candidates, permanent and temporary staff appointments remained high by historical standards, but the rate of growth is slowing.
Vacancies jumped at the quickest pace since November in a sign businesses were encouraged to hire staff after the end of Plan B curbs.