Uncertainty has grown since the EU referendum in June 2016. Confidence in economic conditions and hiring and investment decisions has failed to recover whilst the inflation rate has been steadily increasing. With a scarcity of candidates and existing skills shortages being exacerbated by Brexit, it is unsurprising that employers are having to increase starting salaries to secure the talent they need.
Employee earnings are on the rise
According to our July survey data published in August’s Report on Jobs, the rate of increase in permanent starting salaries was the sharpest recorded since November 2015. Similarly, hourly rates of pay for workers in temporary/short-term employment continued to increase with the rate of inflation being one of the strongest recorded for the past two years. Standard salaries for existing staff have also risen, with the NLW pay boost being particularly welcomed by millions of low-paid workers.
Cost projections relating to salaries further highlight this upward trend. According to a survey of 200 employers in our latest report Perfect match: Making the right hire and the cost of getting it wrong, three in 10 employers across the UK predict starting salaries for new staff will further increase over the next year, which is good news for workers in the context of rising inflation.
Uncertainty hinders job progression
The perceived increasing risk of job insecurity brought about by ongoing economic and political turbulence appears to be discouraging many people from changing jobs, even if this means they could move up the pay scale. Instead, they choose to remain in their current job, but as individual career progression slows down, their performance is gradually dropping and business growth is put at risk.
Grasp the opportunity to scale up
In this ever-evolving jobs market, challenges also present opportunities. Demand for candidates and subsequent higher pay may put pressure on many businesses but it can also create great opportunities for people with in-demand skills who are prepared to change jobs and for the businesses that recruit them. Through professional and robust recruitment practices, the recruitment industry must send a clear message to encourage job and pay progression, as well as greater investment in training the domestic workforce as a long-term solution to the skills shortage.
Alongside a comprehensive post-Brexit immigration policy that allays employers’ fears about losing access to workers from the EU, this will enable recruiters to support businesses in planning their workforce effectively and increasing labour productivity so that the UK economy can flourish. The months to come remain crucial for the UK economy but the industry’s efforts are all the more vital in ensuring the long-term health of the UK’s job market.