Starting salaries see record increase as recruitment spikes

According to new study, starting salaries are at an all-time high, and permanent recruitment is at an all-time high.

Permanent starting salaries grew at a record rate in November, according to the latest Report on Jobs from KPMG and the Recruitment and Employment Confederation (REC). Permanent starting salaries have risen every month since March 2021.

Temporary salaries have also risen for the ninth month in a row, with pay for temporary workers growing for the ninth month in a row.
Between October and November, the Permanent Pay Index rose slightly from 77.2 to 77.8. A number higher than 50 implies a rise in salaries, while a score below 50 shows a decrease.

The Temporary Wages Index continued to rise in the UK as a whole, from 70.7 to 68.7, but the regional picture was different, with the Midlands witnessing by far the largest increase, from 69.6 to 70.9.

Permanent staff appointments increased for the ninth month in a row, with the Permanent Placements Index climbing from 66.8 in October to 69.2 in November, according to the study.

Respondents in the study, which took data from approximately 400 UK recruitment and consulting firms, ascribed the increase to sustained demand for workers, but there were complaints that limited applicant supply had hampered businesses’ ability to fill positions.

The Temporary Billings Index increased marginally from 60.9 to 61 in November, with London having the most significant increase, from 60.2 in October to 65.5 in November.

Clare Warnes, head of education, skills and productivity at KPMG, said employer confidence to hire was reassuring, but added that the current trajectory was unsustainable: “The pace of demand for workers is running far faster than supply can keep up with, which is draining an already diminished pool of available talent and feeding into inflationary pressures.”

“The priority must be to replenish the workforce and ensure businesses can access the talent they need. That means equipping job seekers with the skills that employers and new industries are looking for, increasing labour market flexibility and improving transport links.”

The Permanent Staff Availability Index rose from 27.4 in October to 31.2 in November, indicating a continuous drop in permanent staff availability. However, the decrease was the smallest in six months, with the Permanent Staff Availability Index rising from 27.4 in October to 31.2 in November. Only 8% of survey respondents reported an increase in permanent employee availability, whereas half (49%) reported a decrease.

Similarly, the Temporary Staff Availability Index rose from 28.9 in October to 31.3 in November, indicating that temporary candidate numbers fell for the first time in six months.

Neil Carberry, chief executive of the REC, said that the figures were positive for those looking for a job because demand for staff has increased starting salaries and temporary rates of pay. “Hospitality will be in the forefront of any changes as we approach the festive season, of course, and the impact of high inflation will also be felt as purses tighten in January”, he said, but added that the Omicron variant may change the outlook for December.

“The labour market will remain tight for some time to come… this will put a premium on skills development, and the flexibility to hire overseas when necessary. These two issues will be critical ones for the government to address next year – both levelling up and delivering a global Britain rely on them.”

Jon Boys, labour market economist at the CIPD, said that employers need to offer broader benefits to potential candidates that go further than increasing starting salary. “To attract and retain staff they should also look at training, development and progression opportunities and ensure flexible working options are widely available,” he said.

“We also need significant changes to skills policy, starting with reforming the apprenticeship levy to a more flexible training levy, to boost employer investment in skills development.”