Experts have called on the government to collaborate with companies, as they state that a record high wage growth will not sustain economic recovery.
A survey of 400 recruiters - by the Recruitment and Employment Confederation and KPMG - recorded an increase in permanent starting salaries. In addition, they witnessed the rate of growth of permanent starting salaries accelerating in September - to hit a new record for the third month in a row.
A rise in average hourly rates of pay for short-term staff was also seen in September - with salaries awarded to new permanent joiners and temporary staff both increasing at the fastest rate in 24 years of data collection.
Of the 400 UK recruiters polled 57 per cent saw higher pay for new permanent joiners, with less than 1 per cent seeing salaries fall.
Although it was reported that some candidates negotiated higher pay, recruitment experts suggest that the swell in starting salaries was predominantly because of the increased competition and attempts by businesses to attract applicants.
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.”
She added that whilst the end of the furlough scheme should bring many new workers to the job market, it was not likely that these people would have the right skills for the sectors with the most demand - advising:
“Reskilling and supporting people to move jobs which are in demand needs to be speeded up.”
Neil Carberry - Chief Executive of the Recruitment and Employment Confederation - stated that whilst this was the fastest growth in starting salaries since this survey began, recent events have shown how labour shortages have affected people’s lives.
He said:
“The scale of the shortages we are seeing cannot be explained by one factor alone but are a major challenge to businesses’ ability to drive the prosperity of the UK in the months and years to come - supporting families and paying the taxes that fund public services.”
He added:
“It is essential that the government works in partnership with business to deliver sustainable growth and rising wages, rather than a crisis-driven sugar rush.”
David Allison - Chief Executive Officer at GetMyFirstJob.co.uk - one of the recruitment firms that responded to the survey - remarked that the sorts of roles where more staff are required also command higher salaries.
He stated:
“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. 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.”
