Worker shortage hitting business and wage growth, report claims

Finding suitable candidates was becoming increasingly difficult in November, according to recruitment firms - PA

Businesses are struggling to find the skilled workers they need, stalling firms’ growth and holding up wage increases, jobs market data has revealed.

Workers won permanent jobs at the quickest pace for three months in November, according to the Report on Jobs, compiled by IHS Markit on behalf of the Recruitment and Employment Confederation (REC).

This comes as the Confederation of British Industry predicted that unemployment will fall to a 44-year low in 2018, dropping from a current level of 4.3pc to 3.9pc next year.

The tightening of the labour market revealed in the REC report would not lead to wider spread pay increases for the workforce at large, its chief executive warned, however.

“Having less access to candidates can have severe effects, restricting businesses’ ability to grow which means they won’t be able to create jobs or increase pay for staff,” said Kevin Green, REC chief executive.

Wage growth is stagnating...

But high demand for staff was leading to some increases in pay, according to the report. Steep increases in starting salaries for permanent jobs were recorded in all regions in the UK in November, with the North of England seeing the biggest hike.

Recruitment agencies said that 40.3pc of firms had seen an increase in billings for both temporary and permanent workers for November. However, 72.2pc of permanent salaries were reported as the same month on month and 81.2pc of temporary worker pay rates.

This suggests that while scarcity in suitable candidates might have boosted the recruitment firms’ coffers, most workers starting new roles were not seeing a big leap in pay.

The number of staff being placed in permanent roles also rose last month with 38.1pc of firms saying that it had increased month on month, but this came with shortages of skilled workers. Recruiters reported a “further steep drop” in candidate availability during November.

“Private sector staff vacancies rose sharply for both permanent and temporary roles [last month],” the report stated.

In order to safeguard the labour market going forward the Government needed to give EU workers already in the UK certainty on their future status, Mr Green said.

“In addition, the Government needs to think longer term about how to fill vacancies left by EU workers. Turning the Apprenticeship Levy into a broader training levy will help,” he added.

Data from the Office for National Statistics (ONS) showed that job vacancies rose by 3.2pc in the third quarter of 2017 compared to last year. But internet-based recruitment spending tumbled by 10.9pc year on year in the three months to June this year.