Companies fighting over a shrinking pool of potential employees willing to take a new job have had to bump up starting salaries at a record rate to attract workers, writes Alan Tovey.
Data from the REC/KPMG report on jobs show 38.3pc of employers had to pay more in June than in the previous month to lure staff, compared with 58.2pc who said pay had not moved and 3.5pc who were paying less.
On the survey’s indexed scale, this gave a reading of 67.4 – well above the 50 mark which separates pay increases and decreases. It was also the highest reading since the survey launched 1997. Pay has now risen for 26 months.
Bernard Brown, partner and head of business services at KPMG, said: “Once again employers seem ready to ‘splash the cash’ in what appears to be a desperate attempt to lure skilled staff from competitors. Yet despite offering starting salaries at a rate that has not been seen during the survey’s 17 year lifetime, it is clear that candidates are not easily swayed.
“As consumers they may be facing rising house prices and struggling to build financial reserves because of low interest rates, but the desire for extra disposable income is not yet translating into a generation of employees who are only loyal to their monthly pay cheque.
“It’s a message employers would do well to take to heart as, although many might argue that by offering higher pay packets, they are showing market confidence, the truth is that continued starting salary growth is unrealistic and unsustainable over the long term.
“Ultimately candidates are also suggesting this by voting with their feet, because we have also just witnessed the biggest fall in candidate availability for 17 years.
“Perhaps this means that the productivity gap is being replaced with another chasm – a vacancy vacuum – and one that is unlikely to be resolved until employers recognise that, for staff, remuneration is about much more than take home pay.”
The report also revealed a large fall in the amount of staff available to take up permanent positions, dropping to a reading of 27.5, and representing the fifth month the labour market has tightened.
June’s survey results again showed that demand for staff continued to increase at a considerably quicker rate from the private sector for both permanent and temporary workers. In both the public and private sectors, demand for temporary workers rose at rates that outstripped those seen for permanent staff.