A shortage of candidates led to record growth in starting salaries for both permanent and temporary staff in September.
According to the latest Report on jobs from the Recruitment and Employment Confederation (REC) and KMPG, salaries awarded to new permanent joiners and temporary staff both increased at the fastest rates in 24 years of data collection.
Nearly 57% of the 400 recruiters polled recorded in increase in permanent starting salaries, while less than 1% that saw salaries fall.
They also saw a rise in average hourly rates of pay for short-term staff in September.
Claire Warnes, head of education, skills and productivity at KPMG UK, said: “This month’s unprecedented increase in starting salaries – the highest in 24 years – is being driven by the near record fall in candidate availability. 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.”
REC chief executive Neil Carberry said: “Competition for staff has led to the fastest growth in starting salaries since this survey began – not just in logistics and food processing [where staff shortages are particularly stark], but in white collar professions as well.”
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The rate of growth in permanent placements eased only slightly from August’s record high. The report records a permanent placements score of 71.8, compared with 72.7 in August – a figure over 50 indicates growth.
Although the rate of growth in temporary placements was still sharp and well above average in September, it was the slowest rate seen since April: the score was 61.1 in September, down from 67.7 in August.
Candidate availability continued to plummet. The total staff availability index score for September was 25.2 and for temporary workers 28.4 – both well below the neutral 50 level.
Permanent staff in IT and computing were the most in-demand in September, followed by hotel and catering, engineering, nursing and medical care, accounting and financial, and retail staff.
Temporary staff in hotel and catering, nursing and medical care, blue collar and engineering roles, were also highly desirable.
Carberry urged the government to work with businesses to deliver sustainable growth in candidate supply and wages, rather than allow “a crisis-driven sugar rush”.
“That includes working on policies that encourage business investment, an international outlook and skills development, especially at Levels 1 and 2 where shortages are most acute – this will also help unemployed young people get into work,” he said.
David Allison, CEO at GetMyFirstJob.co.uk – one of the recruitment firms that responded to the survey – said the types of roles where more staff are needed also command higher salaries.
“Many organisations have historically relied on cheap labour from young people as part of the solution. However, our data shows that young people are increasingly well informed about their choices. The £4.30 apprentice minimum wage, for example, just won’t cut it. There is growth in demand for sectors such as digital, IT and professional services where not only is the starting pay better, but career progression is also understood,” he said.
“The message to employers is clear. If you are recruiting young people to build skills and capability for the future, then a competitive salary and career progression have to be part of the package.”
A survey by the Open University and the Institute of Directors has found that a quarter of business leaders say hiring is their biggest challenge, with 45% having trouble hiring non-senior roles.
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The government has attempted to solve some skills shortages by offering temporary visas to HGV drivers and poultry workers, with ministers reportedly weighing up changes to entry requirements for butchers amid fears that thousands of pigs would have to be culled due to worker shortages.
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