UK Job Market Experiences Surge in Pay OffersUK Job Market Experiences Surge in Pay Offers A survey conducted by the Recruitment and Employment Confederation (REC) and KPMG has revealed a significant acceleration in pay offers for new hires in the UK. The findings indicate that starting salaries for permanent staff increased at the highest rate in eight months during June, while temporary positions also witnessed wage growth. Strong Pay Pressure Amidst Declining Hiring The pay pressure observed in REC’s survey is particularly noteworthy considering the simultaneous decline in hiring pace and reduced job vacancies. The Bank of England (BOE) closely monitors pay pressures in its determination of when it can begin lowering interest rates. The BOE’s current high interest rate policy aims to mitigate the risk of a wage-price spiral. Influences on Hiring Slowdown REC attributed the hiring slowdown to a pause in activity ahead of the recent UK general election. “Employers are still hitting the brakes on recruitment with the general election period causing some uncertainty,” stated Jon Holt, chief executive at KPMG in the UK. Improved Business Confidence and Inflation Concerns A separate survey by the British Chambers of Commerce (BCC) suggests an improvement in business confidence and a reduction in concerns about the economy. 58% of companies anticipate an increase in turnover over the next year, and fewer than half are now preoccupied with inflation. The BCC survey indicates a potential easing of inflationary pressures, as fewer businesses intend to raise prices in the near term. Investment and Inflation Concerns “Investment levels remain a long-term concern,” said David Bharier, head of research at the BCC. Despite the overall positive sentiment, concerns persist regarding long-term investment. Other Findings * The REC survey also revealed a decline in the number of job vacancies, adding to evidence that labor shortages and minimum wage increases continue to fuel wage inflation. * Another report from Indeed indicates a surge in job searches, particularly in low-paying sectors such as childcare, retail, and hospitality. * Additional information is available on Bloomberg.com.
(Bloomberg) — UK companies are boosting pay offers for new jobs at the fastest pace since October, a survey of job recruiters showed in an indication of lingering inflationary pressure that may concern the Bank of England.
The Recruitment and Employment Confederation and KPMG said starting salaries for permanent staff rose at the strongest pace in eight months in June, and pay for temporary posts also increased. A separate survey from the British Chambers of Commerce showed an improvement in business confidence and fewer concerns about the economy.
The pay pressure in REC’s survey was especially remarkable because it coincided with a decline in the pace of hiring and drop in job vacancies. The BOE is watching pay pressures carefully in deciding when it can reduce interest rates, which it’s left at a 16-year high to head off the risk of a wage-price spiral. REC attributed some of the hiring slowdown to a pause ahead of the general election last week.
“Employers are still hitting the brakes on recruitment with the general election period causing some uncertainty,” said Jon Holt, chief executive at KMPG in the UK. “Permanent hiring has taken a particular hit. This lack of demand means competition for the few roles available continues to drive pay growth.”
The British Chambers of Commerce said 58% of companies expect an increase in turnover in the next year and that less than half of companies are now worried about inflation. It indicated lower inflationary pressures, saying fewer companies expect to increase prices in the next three months.
“Investment levels remain a long-term concern,” said David Bharier, head of research at the BCC.
The REC figures add to evidence that labor shortages and the increase in the minimum wage rate are keeping wage inflation elevated even in the face of declining vacancies.
Another report from the recruitment website Indeed showed that searches for jobs rose at the fastest pace since January, with lower paid roles in sectors like childcare, retail and hospitality seeing the strongest increases.
The REC survey also found:
More stories like this are available on bloomberg.com
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