Job candidate shortage in the UK pushes salaries up
A shortage of talent is pushing salaries higher, new recruitment data shows.
All the recent data has been pointing towards huge improvements in the UK labour market, with employment rising much more quickly than was expected even just a year ago.
But concerns have lingered around the nature of the jobs being created – as more people have gotten into work, wages have largely failed to match inflation and remain far below pre-recession figures.
So new data from KPMG and the Recruitment and Employment Confederation (REC) is particularly encouraging.
July’s Report on Jobs indicates that the average starting salary for permanent staff placed by recruitment consultancies rose strongly.
In fact, the rate of increase was only slightly lower than that recorded in June – which was the fastest since the survey began. Although temporary and contract staff saw their pay rise significantly as well, the pace was a little slower than the 79-month high noted in the previous month.
The cause of this sudden rise is simply that companies are struggling to find the right people. The availability of permanent staff dropped at the sharpest rate since the beginning of the survey, and even that of temporary and contract workers fell at the quickest pace since March 1998.
“Due to the shortage in talent, companies are finding it difficult to hire staff and are having to increase salaries to find the right people. Companies may need to re-evaluate, and take on less experienced talent and train them to fulfil the shortage,” said Emma Felton, Business Development and Placements Executive at LSBF.
“Training students early in life for the job market would be extremely beneficial – companies can bring in committed, motivated individuals, who can earn while they learn. This will save businesses money in the long run while young professionals will benefit from gaining valuable workplace skills.”
The Financial Times reports that even though surveys have shown starting salaries are rising, it may be that wages have not been rising according to other metrics because candidates just aren’t moving jobs.
Bernard Brown, partner and head of business services at KPMG, says that is starting to change.
“Perhaps it’s true that ‘every person has their price’ because the movement in labour is coinciding with another rise in starting salaries,” he explains. “Just a few months ago employers couldn’t tempt staff to switch roles, but indications are that employees’ caution over change is being replaced with hunger for something new.”
But more people leaving jobs will create more vacancies, and firms may find they struggle to replace the talent they are losing. REC chief executive Kevin Green says that the economy is likely to be held back unless employers start investing in hiring and training young people.
“Investing in staff development will help companies attract and retain talent,” he added.