The Intelligence

The Intelligence

With REC senior researcher, Thalia Ioannidou


Tackling uncertainty through job and pay progression Uncertainty has grown in the weeks preceding and following the 8 June general election. This has been primarily reflected in reduced confidence in economic conditions and investment decisions. 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. 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. All monitored UK regions saw steep increases in pay, led by the South of England. 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. 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 believe starting salaries for new staff will further increase in the next 12 months. Standard salaries for existing staff have also risen, with the NLW pay boost being particularly welcomed by millions of low-paid workers. Again, the majority of employers predict that salaries will continue to increase over the next year, which is good news for workers in the context of rising inflation. 

Despite rising starting salaries, 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. In turn, this could have an adverse effect on productivity as individual career progression slows down. Employers predict greater reliance on temporary workers to address skills shortages. In fact, almost a quarter (24%) of employers surveyed during April-June transfer at least half of their temporary workers to a permanent post each year, mirroring the difficulty to recruit people with in-demand skills in permanent roles.

Almost a quarter (24%) of employers surveyed during April-June transfer at least half of their temporary workers to a permanent post each year, mirroring the difficulty to recruit people with in-demand skills.

As economic uncertainty continues a year on from the EU referendum, the recruitment industry has a vital role to play in ensuring the long-term health of the UK’s jobs market. A healthy jobs market is one which focuses on the skills, quality and aspirations of the workforce. Through professional and robust recruitment practices, the 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 improving labour productivity. As a result, not only will wage growth come at less of a cost for businesses, but it will more importantly help businesses and the UK economy at large to recover and flourish.

  • To read more about the latest recruitment and employment trends, subscribe to the REC/HIS Markit ‘Report on Jobs’ at a discounted rate of £450 for REC members; or take part in the survey panel to receive the REC’s most up-to-date source of monthly UK labour market data and analysis for free. 
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