Huge Hike In Salaries Due To Skills Shortage

June’s Report on Jobs published by The Recruitment and Employment Confederation (REC) and KPMG reports a record rise in salaries while permanent candidate availability has continued to plummet.

The REC survey of 400 recruitment agencies showed that 38 percent reported firms offering higher salaries than a month ago, with 58 percent seeing little change and 4 percent reporting lower salaries. On a seasonally adjusted basis, this gave the highest index reading since the survey started in October 1997.

This latest survey also indicated a considerable reduction in the availability of staff with the relevant skills to fill permanent roles and temporary/contract staff. Consequently, starting salaries for people entering both temporary and permanent employment have risen for the seventh consecutive month.

Similarly, last month’s report, recorded the availability in permanent candidates falling at the sharpest rate since 1997. However, despite the candidate shortage many employers are still in the mood to recruit.

Half of recruiters said that because of the skills shortage it was harder to find staff than a month earlier, while just 5 percent found it easier, leading to the weakest overall reading since the survey started. The skill shortages has led to a sharp rise in salaries. Bernard Brown, Partner and Head of Business Services at KPMG described the sharp rise as a: “desperate attempt to lure skilled staff from competitors”. The question is will it work? He also claimed: “candidates are not easily swayed”.

The greatest demand for staff was in the engineering and construction sectors, followed by a shortage of accountants.

Meanwhile, across the pond, the US saw June marking the best five-month stretch of job creation since early 2006, with the unemployment rate falling to 6.1%, the lowest level since September 2008. The Wall Street Journal reported on the signs of labour-market strength as the economic recovery heads into its sixth year sending a welcome signal of economic health.


  • Permanent and temporary staff availability both continue fall
  • Demand for staff and placements both continue to increase
  • Record increase in average starting salaries recorded

The Regions

The sharpest increase in permanent placements was seen in the Midlands, closely followed by the South, London remained relatively slow. Similarly, findings were found in terms of temporary billings growth was the Midlands followed by the South. The North also saw a stronger increase in temp billings, again London recorded a slower rate of expansion.

Public/Private Sector

The demand for staff continued to increase at a considerably quicker rate from the private sector for both permanent and temporary staff. Demand for temporary staff rose considerably more than those seen for permanent staff for both the public and private sector.

Staff Categories 

  • Engineering was the best performing sector in the demand for staff ‘league table’.
  • Engineering was also the most in-demand type of temporary staff, followed by   Blue Collar and then Construction.
  • Demand for temporary staff is rising at stronger rates across all categories when compared to 12 months ago, with the exception of Nursing/Medical/Care.

Report on Jobs Kevin Green-REC

Kevin Green, CEO at REC

“June saw record growth in starting salaries and yet another monthly increase in the number of people securing a permanent job. 

“However, this month sees the number of workers available to fill vacancies plummet to an all-time low, in particular across business development and sales roles that are vital to boosting bottom lines. There are also persistent shortages across IT and engineering, which are becoming a serious threat to economic growth. 

“The message to UK businesses is that it is crucial to sharpen up hiring procedures in an increasingly candidate driven market.  The message to government is that we need to reform the visa system to satisfy immediate demand for skills, whilst stepping up measures to boost the UK skills base for the long-term.”

Report on Jobs Bernard Brown-KPMG

Bernard Brown, Partner and Head of Business Services at KPMG

“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.”

Previous Reports

May Report
April Report

March Report

February Report
January Report


Mike Sandiford
Head of Partnerships
0207 193 9931

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