Pay keeps rising as demand for staff grows

Jul 06 2004 by Brian Amble Print This Article

Strengthening demand for staff from Britain's employers is exacerbating skills shortages and pushing up pay at the fastest rate for more than three years.

The latest Report on Jobs from the Recruitment and Employment Confederation (REC) and Deloitte and Touche suggests that recruitment consultancies’ permanent and temp business increased strongly again in June. Ongoing growth of staff appointments continued to be driven by robust growth of demand for staff by employers, which rose for the twelfth successive month.

The availability of candidates to fill vacant positions at employers fell for the eighth consecutive month in June. Moreover, the rate of deterioration gathered pace from the previous month’s already sharp rate. As a result, consultancies reported that skill shortages widened during the month and that they were finding it increasingly difficult to fill a growing number of vacancies.

On a scale where figures above 50 denote an increase or improvement and figures below this signal a decline or deterioration, the availability of staff currently stands at 38, down 10 points since the beginning of the year and a fall of 0.7 on May's figure.

Brett Walsh, European Head of Human Capital at Deloitte said: "The recent trend that has seen employers shifting away from widespread cost cutting to investment in extra capacity continued in June. Indeed, the strength of demand for staff has exposed widespread skill shortages amongst available candidates and this again exerted strong inflationary pressure on pay rates.

"Average starting salaries awarded to people placed in new jobs are now rising at a pace not seen since the first quarter of 2001."

Rising demand for staff was supported by higher levels of business activity in the UK economy, which encouraged a growing number of firms to invest in the expansion of capacity, the report added.

Growth of demand was broad-based across all main staffing sectors, but was particularly strong for engineering and construction staff.