Staff shortages are pushing up pay, recruiters say

The UK labour market is tightening, with employers finding it harder to recruit staff, according to a survey of employment agencies.

The survey says that pay rates for both permanent and temporary staff are rising quickly due to a continuing fall in the number of job applicants.

Last year's Brexit vote is also driving some EU nationals home, making it harder to fill a wide variety of jobs.

Official figures have shown employment levels in the UK at record highs.

The monthly survey of employment agencies was carried out by market research firm Markit for the Recruitment and Employment Confederation (REC).

REC chief executive Kevin Green, said: "It's clear that employers are having to work even harder to fill jobs as vacancies rise and candidate availability shrinks.

"The parts of the economy most reliant on European workers are under even more pressure as many EU workers return home.

"Employers are not just struggling to hire the brightest and the best but also people to fill roles such as chefs, drivers and warehouse workers," he added.

'Robust demand'

The survey, which has been going since 1997, looked at the experience in July of 400 UK recruitment and employment agencies.

It found that there was "robust demand" for staff with the number of applicants placed in permanent jobs, and also in temporary or contract jobs, growing at their fastest rates for more than two years.

Meanwhile, it said, the number of available candidates for both types of work fell markedly during the month.

The report's suggestion that pay rates for permanent jobs are now rising as a result, and are at a 20-month high, will raise some eyebrows.

Official data from the Office for National Statistics has indicated that the growth of average weekly earnings across the UK has been slowing down.

Earnings are now only 1.8% higher than a year ago - the slowest rate of increase since late 2014 - which has contributed to a cut in real incomes because the rate of inflation has been higher.

Looking at its own survey results, the REC said some of its members had noted that employers were indeed offering higher pay rates to lure the right recruits.

"Permanent starting salaries rose across all monitored UK regions, with the steepest rate of inflation seen in the South of England," the REC said.

"Temporary and contract staff hourly pay rates increased again in July.

"The rate of inflation softened slightly since June, but was still one of the strongest recorded for the past two years," it added.