United Kingdom : Businesses across Britain are short of workers across scores of sectors and at all skill levels, putting pressure on bosses to hike salaries, recruiters are warning.
Companies are reluctant to raise pay when productivity has been stagnant but have found themselves with no choice as staff, from minimum wage entrants through the professions and all the way to leadership positions, are so scarce.
“I have been doing this job for 10 years and I have never seen data like this,” said Kevin Green, chief executive of the Recruitment and Employment Confederation.
“We have lists where recruiters cite the jobs they are currently finding it hard to fill, in permanent jobs there used to be six or seven areas. Now there are 50 or 60. It goes on and on and on. “It is comprehensive, you would have to say the skill and talent shortages are pervasive across the economy at the moment. Unemployment is down to a 42-year low of 4.3pc, making it hard to find workers in most regions of the UK.”
Mr Green expects employers to continue to raise their salary offers to get more workers – and it may also force them to raise wages for existing employees to stop them leaving for higher offers elsewhere.
The REC found 21pc of recruiters reporting a rise in salaries awarded to new permanent staff in December compared with November. By contrast only 4pc said starting salaries were down.
This face of growth is down a touch on the month, but represents an unusually high level for December as the end of the year is typically a more quiet period in the jobs market – so the level of pay rises may be more significant.
Recruiters reported sustained growth in vacancies combined with one of the biggest falls in candidate availability for two years, indicating the low level of unemployment has made it hard for employers to recruit staff.
At the same time workers, in the UK and across the world, could soon become emboldened to demand more pay, according to economists at JP Morgan, as the global economy picks up pace.
Wages have struggled to grow even as unemployment rates fell after the financial crisis, but the economists, led by Bruce Kasman, think the gloom cast by the credit crunch could soon lift.
“Global financial crisis [induced] post-traumatic stress generated persistent cautious household and business spending behavior, manifested in a greater focus on household job security and on corporate maintenance of market shares,” the economists said. The eurozone debt crisis and a tightening in emerging market credit also hit hard.
“If we are right that the lifting of the global financial crisis’s shadow is promoting a strong, synchronized global expansion it should have important repercussions for price- and wage-setting behavior and thus the inflation outlook,” the analysts said.
JP Morgan has raised its global GDP growth forecast by 0.3 percentage points in the past month. JP Morgan’s “nowcast”, which seeks to track the economy in as close to real time as possible, indicates the UK economy grew at an annualized rate of 2pc in the final quarter of 2017, outstripping the forecast for 1.2pc growth.
Economists had expected wage growth to take off once unemployment got to these low levels, but have been disappointed so far – average wages are currently failing to keep pace with prices, squeezing living standards.
It is a challenge across many of the advanced economies.
Economist Seth Carpenter at UBS studied the unemployment and pay growth rates across 400 metropolitan statistical areas and found “no discernible relationship” between the two.
“While we do think that a tight labor market eventually will push up wage growth, we don’t think there is a tight relationship,” he said.
A Bank of America Merrill Lynch survey of UK consumers also found workers expect weaker pay growth in 2018 than in 2017, which may have repercussions when employees come to wage negotiations with their bosses.
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