Business

Job switchers rewarded with the fastest salary rises in three years

Starting salaries for workers increased at their fastest pace for three years in May, according to a closely followed survey, adding to signs that inflationary pressure in the UK is growing.

The report, published today by the Recruitment and Employment Confederation (REC), will show 32 per cent of recruiters reported higher average salary awards for the month, while an index tracking the overall balance of pay rose to 63.4, far above the 50 mark denoting no change.

The increase in pay pressure comes against a backdrop of staff shortages for both permanent and temporary vacancies, as employers scramble for talent amid a tight labour market.

Read more: Wages and domestic inflation pressure to rise says Bank of England boss

Unemployment is currently at a four-decade low rate of 4.2 per cent, according to the Office for National Statistics, with the REC reporting falling availability of staff in every month since May 2013.

Employers in nursing, engineering, manufacturing and information technology are struggling to fill roles in particular, the REC said.

Demand for staff continues to grow, hitting a six-month high in May, with sharp increases in both permanent and temporary roles.

Read more: London salaries are growing – but not as fast as these other UK cities

The figures will bolster the Bank of Englands case to raise interest rates. The Banks deputy governor Sir Dave Ramsden yesterday said the amount of slack left in the economy is diminishing and that wage growth is likely to pick up in the coming months.

REC director of policy Tom Hadley said: “Despite growth in demand for staff this month, we have seen another severe drop in staff availability.”

He added: “Because of the lack of candidate availability we are seeing employers paying higher salaries to attract the right people. This is only part of the solution, with employers also having to think about providing a more flexible working environment and progression opportunities.”

Read more: Hospitality industry reports rising salary pressure for temporary workers

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