Time for workers to squeeze the most from shortages

From traditionally lower-wage positions in hospitality and retail through to HGV drivers, construction workers and IT specialists, employers across the spectrum are reporting staff shortages that have left them jostling to squeeze more workers out of a shrinking pool of candidates. As a result, starting salaries in the UK are increasing at the fastest pace recorded in 24 years, according to the latest Report on Jobs survey from the Recruitment and Employment Confederation (REC) and accountancy group KPMG.

While vacancies in July increased at the fastest since the survey began in 1997, the number of people seeking to fill them dropped almost as rapidly as June’s record pace. With most lockdown restrictions now lifted the challenge, as Bank of England Governor Andrew Bailey pointed out earlier this month, has shifted from avoiding a steep rise in unemployment to one of ensuring a flow of labour into jobs.

No great surprise then that rates of pay are on the increase. In its survey, the REC said 48 per cent of the 400 recruitment and employment consultancies questioned reported higher starting salaries, while just 1% noted a drop. Its starting salary index – in which any reading above 50.0 indicates inflationary pressure on wages – rose to 73.2, compared to 66.0 in June.

Some economists have predicted that the end of the furlough programme in September will ease constraints on the supply of available candidates but employers’ groups have warned that this will not be enough, and are pressing for an overhaul of immigration rules to meet the surge in demand for labour.

Increasing rates of pay to lure in workers is the fundamental and immediate response to a labour market squeeze, but increasing salaries is unlikely to solve supply issues on its own. Upskilling to help people move careers will need to be a priority for the government, as will an immigration system that allows companies to source talent from overseas when they can’t find suitable candidates at home.

Many jobseekers may still be hesitant to make a big career move after the tumult of the past 18 months, but for those brave enough to start looking elsewhere, now is the ideal time to go after that “dream job” that will likely come with a healthy pay rise to boot.

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