Skills shortages push up pay inflation

Skills shortages are driving a sharp rise in pay inflation, according to research.

The Report on Jobs, by Deloitte HR consultants, showed that availability of candidates for vacancies fell for the 17th month in a row.

Pay inflation went up at the fastest rate for three months, reflecting a strong demand for staff and shortages of suitable candidates to fill vacant positions, the report said.

Ashley Unwin, partner in the human capital practice at Deloitte, warned that the current recruitment rush could lead to less thorough screening of candidates as pressure builds, as well as contributing to unsustainable pay inflation.

“In the drive for productivity, companies need to consider the impact of short-term recruitment on their longer term growth and talent mix,” he said.

Despite there being fewer candidates available, the report found that permanent staff placements rose for the 22nd successive month, with the rate of expansion picking up slightly following four previous months of easing growth.

Temporary staff billings were also up for the 22nd consecutive month, with growth remaining robust, albeit the least marked since July 2003.

Among permanent staff, hotel and catering staff recorded the greatest improvement in demand. For temp staff, engineering and construction staff saw the most marked rise in demand, the report found.

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