Starting pay reaches a record high due to a downturn in candidate availability

Experts warn wage growth will not sustain economic recovery and call on government to work with firms to avoid a ‘crisis-driven sugar rush’.

Starting pay for all workers hit a record high over the last month due to an increase in competition for staff, research has found.

The latest report found the rate of growth of permanent starting salaries accelerated again in September to hit a new record for the third month in a row. 57% of the 400 UK recruiters and consultancies polled noted higher pay for new permanent joiners, compared to less than 1 per cent who recorded a fall.

Although there were reports of candidates negotiating higher pay, recruitment experts suggest the surge in starting salaries was mostly because of the increased competition for workers and efforts by firms to attract applicants.

The report also revealed that the latest permanent placements index fell slightly from August’s peak of 72.7 down to 71.8 in September. While this indicated more employers were still hiring new staff than not, it suggests the number being posted into roles was easing.

While higher salaries are good for job seekers, wage growth alone is unlikely to help sustain economic recovery because of limited levers to bring people with the right skills to where the jobs are and increase productivity.

It was cited that it is essential the government works in partnership with employers to deliver sustainable growth and rising wages, rather than a crisis-driven sugar rush. It should be encouraged for business investment, considering an international outlook and develop skills.

The report also found that although the total staff availability index rose from 23.0 in August to 25.3 in September, it remained well below the neutral 50 level, signalling a substantial drop in candidate availability.

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