UK firms offer record salary rises

London - British firms are upping salary offers for new permanent staff at the fastest rate in almost 17 years as the pool of suitable candidates dwindles rapidly, a monthly survey of recruitment agencies showed on Tuesday.

The figures from the Recruitment and Employment Confederation (REC) trade body also show widespread pay increases for temporary staff, and could help pave the way for higher Bank of England interest rates.

However, previous strong readings from the survey have yet to be reflected in broader wage data for the whole economy collected by Britain's statistics agency.

So far this year official data has shown wages struggling to keep up with inflation.

The REC survey of 400 recruitment agencies showed that 38% reported firms offering higher salaries than a month ago, 58% saw little change and 4% reported lower salaries. On a seasonally adjusted basis, this gave the highest index reading since the survey started in October 1997.

"Once again employers seem ready to 'splash the cash' in what appears to be a desperate attempt to lure skilled staff from competitors," said Bernard Brown, a partner at accountants KPMG, who sponsor the survey.

Half of recruiters said that it was harder to find staff than a month earlier, while just 5% found it easier, leading to the weakest overall reading since the survey started.

The figures are likely to be of keen interest to the BoE, which is monitoring a wide range of measures of spare capacity in Britain's labour market to judge when to raise record-low interest rates.

Unemployment has fallen rapidly over the past year and hit a five-year low of 6.6% in the three months to April. But annual wage growth has been weak.

Even ignoring April's 0.9% reading - which was partly due to tax changes a year earlier - first-quarter wage growth of 1.9% barely matched inflation in the same period.

The BoE forecasts wage growth of 2.5% for 2014 as a whole - still well below Britain's pre-financial crisis average of 4.5%.

Other industry surveys have shown a more mixed picture of the labour market. Surveys of purchasing managers in the services and construction sectors last week showed record hiring.

But the British Chambers of Commerce reported fewer firms looking for staff or facing recruitment difficulties.

The REC said the greatest demand for staff was in the engineering and construction sectors, followed by a shortage of accountants. The weakest demand was in hotels and catering.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
17.02
+0.9%
Rand - Pound
20.40
+0.6%
Rand - Euro
17.64
+0.7%
Rand - Aus dollar
11.43
-0.1%
Rand - Yen
0.12
+0.3%
Gold
1,753.71
+0.7%
Silver
21.24
+1.5%
Palladium
1,858.50
+0.5%
Platinum
1,003.00
+1.0%
Brent Crude
83.19
-0.5%
Top 40
66,981
-0.0%
All Share
73,311
-0.1%
Resource 10
71,516
+1.0%
Industrial 25
88,260
-0.1%
Financial 15
16,189
-1.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders