Pay growth continues at pace across the UK

Thursday 14 May 2015

The acceleration of pay for permanent and temporary staff has continued at pace in the UK, according to the latest Report on Jobs by the Recruitment and Employment Confederation (REC) and KPMG.

There is also good news for appointments, with the number of temporary staff and contractors being placed into roles increasing further in April.

Although the latest rise was the slowest in six months, it does mark a continual increase, which corresponds with the the rate of growth of demand for temporary/contract staff seen since January.

Overall, the growth of permanent staff salaries accelerated to a nine-month high in April, highlighted by a combination of strong demand and skill shortages.

Hourly rates of pay for temporary/contract staff meanwhile increased at the fastest pace since July 2007 amid tight candidate availability, with the number of skilled temporary workers and contractors declining at a marked pace similar to that seen in March.

Significant  regional variation was also observed, with a reversal of the trend seen in recent months that saw London witness the sharpest growth of permanent placements during April, while the slowest expansion was seen in the Midlands.

Contrary to this, the Midlands remained the strongest-performing region for contractor appointments in April, with the slowest growth indicated in the North.

Private sector demand for staff also continued to rise at a stronger pace than that for public sector workers in April, with executive and professional being the most in-demand categories, followed by accounting and financial workers.

There has been a "resurgence" of recruitment into Britain’s boardrooms, with businesses poaching top talent to drive their companies forward, according to Bernard Brown, Partner and Head of Business Services at KPMG.

He said that this surge of executive hires is a "strong indication" of underlying business sentiment and ambitions for the future.

However, Mr Brown noted: “The declining pool of available labour continues to force pay up.  With two in five recruiters in the UK reporting falling candidate availability, spiralling salary growth remains a concern as businesses bid against each other to secure skilled staff."

Kevin Green, REC chief executive, urged the new Tory government to start to tackle the UK’s "looming jobs crisis".

“For the last two and a half years we’ve seen higher numbers of vacancies being posted by businesses as they seek to capitalise on increased demand. This is good for job seekers, because we continue to see starting salaries increase as employers compete for talent," he added.

However, Mr Green questioned how sustainable the jobs boom is, as skill and talent shortages become "rife".

According to REC and KPMG figures, the availability of staff has been falling for two years, with 40 per cent of businesses saying that the situation is getting worse on a monthly basis.

As such, Mr Green urged: “Our new government needs to get to grips with this crisis by improving vocational education, providing quality careers advice for all, and ensuring a sensible approach to immigration to help businesses find the skills they need to compete and win."
Despite this, the overall position for workers across the English labour market is improving, which will come as welcome news after years of uncertainty catalysed by the recession.

By Victoria McDonnell

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