Salaries in the City of London have risen by an average of 7.5 per cent since February 2005 as a shortage of candidates leaves employers struggling to recruit skilled staff.
The trend is even more marked among senior professionals, where salaries have risen 16 per cent over the last four months to £77,081, according to figures from City recruiter Morgan McKinely.
Over the twelve months since May 2004 the average basic City salary offering rose by 3.5 per cent. It is now £49,800 compared to £47,042 in May 2004.
Senior professionals have benefited the most over the year witnessing a rise in basic salary offerings of 5.6 per cent. This compares with a yearly increase of 3.5 per cent for middle market professionals and just 1.9 per cent for admin/support staff.
"In 2004 support staff benefited most from an upswing in recruitment, as organisations brought departments to optimum headcount to cope with increased market activity," said Robert Thesiger, Chief Executive of Morgan McKinley.
"This year senior professionals and middle market professionals are benefiting financially from an increase in hiring demand.
"A shortage of high calibre candidates means banks are more willing to pay a premium for candidates with the right skill sets, which is resulting in upward pressure on salaries," he added.
The figure also show a significant increase in the number of new jobs in the City. Over the four months since February 2005 the number of new jobs coming onto the market increased by 22.7 per cent. There were approximately 6804 new City jobs on the market in May. Over the year new jobs have increased by 20 per cent.
Morgan McKinley estimates that there are currently 12,978 outstanding vacancies in the City.
In May, figures from the Centre for Economics and Business Research (CEBR) estimated that City employment would rise to 320,000 this year, an increase of some 4,000 jobs on 12 months ago, reaching 325,000 in 2006.
Meanwhile, although the number of new candidates registering for employment has increased by 34.7 per cent over the last twelve months, it is currently taking candidates 27 per cent less time to find a position than in May 2004.
"In May the market was relatively buoyant with a steady flow of new jobs coming from the major players. Some of the larger investment banks who hadn't been recruiting in the early part of the year began to recruit last month, which also contributed to an increase in new jobs," Robert Thesiger said.
"The market is firmly candidate-driven across most sectors within the financial services industry, particularly as hiring is focused at the senior-end where good candidates are in short supply. As the war for talent continues salaries and overall compensation packages are becoming increasingly competitive."