Starting salaries and temporary staff wages have risen at the sharpest rate for 24 years, a survey suggests.
According to KPMG and the Recruitment & Employment Confederation, rising economic activity is fueling strong demand for workers (REC).
Simultaneously, there are fewer candidates for jobs, resulting in significant increases in starting pay.
There is a high demand for jobs in industries such as IT, hotels, and catering.
According to a survey of 400 recruitment firms, the number of people looking for work has dropped to a near-record low.
Greater demand for staff, a high employment rate, fewer EU workers, and a lack of confidence among employees to switch roles due to the pandemic, according to recruiters, all contributed to the latest drop in candidate numbers.
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“We have all seen how labour shortages have affected our everyday lives over the last few weeks, whether it’s an empty petrol station or fewer goods on supermarket shelves,” said Neil Carberry, chief executive of the REC. The magnitude of the shortages we are witnessing cannot be explained by a single factor alone, but they pose a significant challenge to businesses’ ability to drive the UK’s prosperity in the months and years ahead.”
“It is critical that the government collaborates with business to deliver long-term growth and rising wages, rather than a crisis-driven sugar rush,” he added.
According to Claire Warnes of KPMG, the “unprecedented increase” in starting salaries is being driven by a “near record drop in candidate availability.”
“Wage growth alone is unlikely to sustain economic recovery due to a lack of levers to bring people with the right skills to where the jobs are and increase productivity,” she added.
‘Competition is fierce’
While she noted that the sharp increase in hiring activity is a “reason to be hopeful,” she also stated that “competition is fierce” because many workers lack the skills required to transfer to the most in-demand sectors.
“Reskilling and assisting people in transitioning to in-demand jobs must be expedited. Otherwise, we risk seeing these obvious labor-market tensions turn into a workforce crisis in a variety of industries “She continued.
Robert Walters Group, an international recruiting firm with offices in the United Kingdom, Asia, and Australia, also stated that “competition for talent is fierce” at the moment.
On Thursday, Robert Walters, CEO of the Robert Walters Group, which recruits for jobs such as lawyers, accountants, and IT professionals, told the BBC’s Today programme that “there are shortages in pretty much any country you care to name.”
The company has raised its profit forecast for the year.
Mr. Walters stated that skills are in higher demand because “every job is becoming more complicated.”
According to his data, sectors such as law and accounting are also experiencing increased demand, and he claims that law firms are now paying newly qualified lawyers £150,000 per year or more, which he describes as “unheard of.”
‘Significant’ wages increases
“We’re seeing a 20% increase in wage inflation… We’ve had 100 percent success rates, so it’s a good sign “ficant,” he continued.
Lord Wolfson, the CEO of Next, warned this week that warehouse and logistics staffing is under pressure.
He stated that the retailer was struggling because staff were not available in the required locations and seasonal workers were difficult to find.
Lord Wolfson advocated for businesses to be able to obtain visas for skills that they “desperately need,” and he suggested that they pay UK workers the same as overseas workers.
To make this competitive, he argued that businesses should pay a “visa tax on top – say, 7% of wages.”
Following that, Lord Wolfson stated that warehouse wages had increased by around 60% in the last ten years, and Christmas wages had increased by 70%, and that “wages have already gone up significantly.”
But, he said the firm was still finding that there were not enough workers in particular areas who wanted to move for short periods of time.
The most recent figures from the Office for National Statistics suggested that growth might be stalling, with real wages – a measure that takes account of rising prices – looking lower in July than they were in April.
There was also a jump in inflation reported for August as well as rising energy prices.
In the early months of the pandemic, average earnings fell as people were furloughed, which meant that their pay fell or they worked fewer hours.
The annual figures we are now seeing are compared to early in the pandemic, which magnifies the wage increase.
Throughout the pandemic, more low-wage workers have been laid off than high-wage workers, implying that average earnings have increased.
According to the Resolution Foundation, there are also 2.6 million workers affected by the public sector pay freeze who will not benefit from wage increases.