UK Job Recruiters Say Pay for Newly Hired Staff Is Still Rising

(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 like childcare, retail and hospitality seeing the strongest increases.

The REC survey also found:

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