Starting salaries are rising at the fastest rate in at least 24 years as a chronic shortage of workers continues to drive up pay offers, according to the latest Report on Jobs from the Recruitment and Employment Confederation.
Demand for staff hit a record high amid strong economic growth as Covid restrictions were eased, but employers complained of a shortage of candidates. The imbalance caused a sharp increase in wages.
The level of permanent placements in July was second only to June since the survey began in 1997. Temporary work billings expanded at the quickest rate since June 1998.
The confederation said that the rapid decline in candidate numbers had been “driven by concerns over job security due to the pandemic, a lack of European workers due to Brexit and generally low unemployment”.
Furlough also has been blamed for causing stickiness in the labour market, as some workers opt to stay in the security of the scheme rather than change jobs.
Data from the Office for National Statistics showed that the proportion of the British workforce on furlough fell to a new low of 4 per cent in the two weeks to July 25, down from 5 per cent a fortnight earlier. It suggests that up to 1.5 million people remain on support. In January, one in five workers were on furlough.
The report, compiled from 400 recruitment and employment consultancies with KPMG and IHS Markit, adds to a growing body of evidence that companies are struggling to get hold of staff, which in turn is driving up pay. The rate of salary inflation was the sharpest recorded in 24 years; hourly pay rates for temporary or contract staff rose at the second fastest pace since the survey began.
Kate Shoesmith, deputy chief executive of the REC, said: “The data confirms that it is a good time to be looking for a new job. Employers are desperate to find good candidates … and this is reflected in starting salaries.”
She said that worker shortages were evident “across all sectors”, and added: “Pay increases alone will not solve the demand that has been building up. We need an immigration system that flexes to meet demand.”
The ONS data showed that on July 30 the total volume of online job adverts was 135 per cent higher than pre-pandemic levels, with huge demand in construction, hospitality and retail, while vacancies in the transport and logistics sector were 338 per cent higher than the pre-Covid norm.