Skills shortages push up wages

Jun 07 2004 by Brian Amble Print This Article

Strong growth in the demand for staff and an increasing shortage of candidates to fill vacant positions have conspired to push up wages growth for the tenth month in succession.

The latest Report on Jobs from the Recruitment and Employment Confederation (REC) and Deloitte and Touche suggests that recruitment consultancies’ permanent and temp business expanded strongly again in May.

The number of people placed in permanent jobs rose for the twelfth successive month and, despite easing slightly compared to April, the rate of growth of placements remained buoyant.

Demand rose markedly for all main types of employee, with the sharpest increase in demand signalled for Engineering/Construction staff.

But over a third of all agencies contacted said the availability of permanent and temporary staff was worse than in April.

"The latest Report on Jobs suggested a further marked increase in the number of new jobs being created by UK businesses in May,” said Brett Walsh, Head of UK Human Capital at Deloitte.

“However, higher levels of employment meant that firms are finding it increasingly difficult to attract candidates with suitable skills and experience without offering substantially higher pay rates. Indeed, starting salaries are currently rising at a rate not seen for over three years."

With the availability of candidates to fill vacant positions declining for the seventh consecutive month in May, skills shortages are becoming more visible and wage inflation is rising. Average salaries awarded to people starting new jobs rose for the tenth month running, whilst temporary staff pay rates rose for the twelfth month in a row. In both cases, the rates of increase were the steepest seen during the recent upturn.

For the REC’s managing director, Gareth Osborne, the figures provide strong justification for importing more skilled labour from the new EU member states.

"It is clear that the job market is now back in full swing, with skills shortages increasing and pay increases rising,” he said.

“These trends put into sharp focus the benefits to the economy of allowing workers from the accession countries to enter the UK and the importance of making it quick and simple for them to enter the country."