Growing demand for staff forcing up pay

Demand for staff continued to increase through January to a 27 month high, new research has claimed.

But the report by the Recruitment and Employment Confederation (REC) and accountants KPMG warned that the growth is also increasing inflationary pressure on workers’ pay.

It revealed that an increase in the number of vacancies had underpinned the growth in appointments.

"This survey provides further evidence of a tight recruitment market. With wage inflation at the top of the Monetary Policy Committee’s worry list, settlements will be watched closely over the next few months to see if these pressures are translating into pay increases more generally," said Michael Carter, people services partner at KPMG.

"In the meantime, further pre-emptive tightening by the MPC cannot be ruled out, which in turn is likely to cause employees to demand further increases in pay."

He advised employers to think more innovatively around how they can reward their employees.

"Most interestingly, the report finds temporary staff salaries increasing at a very strong rate," said Marcia Roberts, chief executive officer REC. “This challenges the unions’ suggestion that temporary work is low paid."