Buoyant demand pushes wages higher

2004

The salaries offered to people starting new jobs are rising at the fastest rate for three years, providing further evidence of growing skills shortages in the UK labour market.

The latest Report on Jobs from the Recruitment and Employment Confederation (REC) and Deloitte and Touche has found that agencies are having increasing difficulty finding both permanent and temporary workers as demand for staff by employers rose for the tenth successive month.

Measured on an index where figures above 50 denotes growth and below 50 contraction, permanent staff availability in April was 40.3 – a fall of eight since January.

This was the sixth successive month that permanent staff availability growth has contracted. Figures for temporary staff availability also dropped six points on the index since the beginning of the year to 41.7 in April.

As a result, average salaries awarded to people placed in new jobs and temporary staff pay rates both rose at sharper rates than in the previous month. Growth in salaries for permanent staff rose for the ninth successive month (to 57.5) while temp/contract hourly rates saw its 11th month of growth (to 57.3).

Brett Walsh, Head of UK Human Capital at Deloitte said that the figures indicated improved business confidence and a further marked expansion of the UK recruitment market in April.

"With a further marked decline in candidate availability, the battle for talent amongst employers continued to heat up. This led to salaries offered to people starting new jobs rising at the fastest rate for three years."

Figures for vacancies in April indicate that demand for staff has risen for ten successive months, with the rate of expansion during the latest survey period easing only slightly from March’s recent high. Furthermore, growth of demand for staff remained broad-based across all staffing sectors.

In a further sign of strengthened demand for staff, national press recruitment advertising rose above the levels of a year earlier for the second month running in March, reflecting the fact that companies are having to search hard to find people with the right skills.

The construction sector continued to record the strongest rate of employment growth, with firms reporting that new workers had been taken on to meet sustained marked growth of workloads.

Expansion was only slightly weaker in the service sector, where strong growth of new business and expectations of further expansion in the future encouraged firms to recruit additional staff.

Meanwhile, a further month of tentative employment growth was recorded by manufacturers in April, as firms responded sustained strong improvement in new orders and the related boost in output.

But in all three sectors growth of employment continued to lag well behind that of output, suggesting that many companies remain wary of overextending capacity.

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