Accelerating skills shortages push up wages

2004

A growing shortage of skilled workers coupled with continuing demand for staff from employers led to further marked increase in average pay rates in Britain last month.

The latest Report on Jobs from the Recruitment and Employment Confederation (REC) and Deloitte and Touche found that recruitment consultancies’ permanent staff placements and temporary staff billings increased strongly again in September, although the rates of increase were slightly less marked than in the previous month.

Overall private sector staffing levels also rose in September for the fourteenth consecutive monthly, although the acceleration in growth of private sector services employment was balanced out by a slowdown in growth of the manufacturing workforce to near stagnation.

Consultancies reported that growth of demand for staff was broad-based across all main employee categories and widely reflected rising levels of business activity at clients. The strongest improvement in demand amongst permanent categories was recorded for Engineering/Construction staff and temporary categories for IT staff.

But growth in the availability of suitably skilled staff declined for the eleventh successive month, with the deterioration accelerating slightly compared to the previous month and permanent employees in particularly short supply.

As a result, said Deloitte’s Brett Walsh, job applicants are in a strong position to demand more from employers.

"Although signs of peaking in the rate of growth of job creation have become more apparent, suitably skilled candidates using consultancies to move to new positions benefited from being able to negotiate substantially higher starting salaries, as employers battled to attract rare talent," he said.

Permanent staff starting salaries rose at a similarly sharp rate to the previous month, the report found, whilst growth of temps’ pay rates also remained buoyant.

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