U.K. Worker Shortages Push Starting Salaries Higher, REC Says

(Bloomberg) -- U.K. firms facing a shortage of workers are pushing up starting salaries, according to IHS Markit and the Recruitment and Employment Confederation.

Pay for temporary or contract staff rose at the quickest pace in six months in March, as the supply of job candidates fell sharply, they said in a report on Tuesday. Vacancies grew across all categories, with engineers and IT workers the most sought after for permanent roles, and hotel and catering employees in highest demand for temporary jobs.

Britain’s decision to leave the European Union is making it harder for U.K. firms to attract workers from overseas, putting them under greater pressure to recruit from the domestic workforce. Signs of stronger wage growth may add weight to expectations that the Bank of England will raise interest rates next month.

“Employers are increasing starting pay to draw candidates away from current roles into new positions,” Tom Hadley, director of policy at REC. “Employers are working hard to make themselves attractive to U.K. nationals, but they will still need temporary roles to be filled by EU nationals post-Brexit.”

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Fergal O'Brien, David Goodman

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