Scramble for staff in UK pushes starting pay up by record - REC

Reuters

Published Dec 09, 2021 01:13

Updated Dec 09, 2021 01:36

LONDON (Reuters) - British employers' hunt for staff pushed pay for new hires up by the most in at least 24 years, according to a survey published on Thursday as the Bank of England begins discussing whether to cool inflation pressure with an interest rate hike.

The Recruitment and Employment Confederation said permanent placements of workers sped up in November to hit its fifth-fastest pace since its surveys began in 1997, pushing up these workers' pay by a record amount. Temporary hiring also accelerated.

Governor Andrew Bailey and other BoE officials have voiced concern that the shortage of candidates to fill near-record levels of vacancies could fuel a surge in pay that causes the recent jump in inflation to become entrenched.

"The current trajectory is unsustainable in the long run for businesses and the wider economic recovery," Claire Warnes, head of education, skills and productivity at KPMG UK, which produces the survey with REC, said.

Better skills training, more labour market flexibility and improved transport links were all important for making sure the labour market continued to function well, she said.

Official measures of broader pay trends have also shown a jump in wages but stripping out distortions caused by the pandemic, growth in earnings could be as low as an annual 3.4%, less than inflation.

The REC survey showed a further fall in candidate supply last month, albeit a less severe one than in October. Demand for staff rose again but at the slowest pace in six months.

Neil Carberry, REC's chief executive, said it was too early to tell the effect of the Omicron variant of the coronavirus, which was unknown when the survey took place from Nov. 12-24.