Good time to move jobs as labour and skills shortages push up wages.
The Times. FebRuary 8, 2018
Starting salaries for people moving to new jobs are climbing at the fastest pace in more than two and a half years as employers struggle to get hold of the staff they need, according to a closely watched survey.
A growing shortage of skills and a 43-year low in unemployment are strengthening the hands of job movers, the Recruitment and Employment Confederation said in its monthly report.
“The UK is plagued by labour, skills and talent shortages,” Kevin Green, the trade body’s chief executive, said. “This increasing competition for good-quality staff is driving up starting salaries, with employers willing to pay higher wages to attract the right people.
“So it’s a good time to move jobs, especially as employers aren’t increasing wages for their existing workforce.”
Any prospect of higher pay would be welcome for households, who on average still earn less in real terms than they did in 2007. On the government’s most recent forecasts, it may not be until 2025 that average real earnings return to their pre-crisis peak, with the surge in inflation since the Brexit vote making the situation worse.
Real wages have shrunk for eight months as prices have overtaken wages. However, average nominal earnings have been creeping up slowly since May last year and even the Bank of England has noted that deals are improving for staff willing to move jobs.
Last week, Mark Carney, the Bank’s governor, told the House of Lords: “We think that the labour market has continued to tighten. We see it in the gradual firming of wages, particularly private sector wages, and particularly of people who are shifting work. There is a prospect of the return of real-income growth later this year.”
Markets will be watching events in the labour market closely after this week’s sudden stock sell-off, which was triggered by returning fears of inflation. Surprisingly strong pay data in America and Germany prompted investors to price in more interest rate rises and adjust their positions. Unemployment is already down to 4.3 per cent in the UK, the lowest since 1975.
The confederation’s report found that starting salaries for permanent placements were increasing at the fastest pace in 31 months and the number of candidates available for permanent and temporary roles “continued to contract at historically sharp rates in January”. It also said that the rate of increase in permanent staff placements in January was the joint-highest since April 2015.
Demand in January was greatest for IT and computing jobs, followed by engineering and then accounting and financial positions. Hotel and catering workers were the most sought-after temporary placements, as well as nursing and care workers. Demand for public sector workers declined.