Increased competition for strong candidates in sectors such as IT has helped boost the starting salaries for permanent staff, a new report has found.
The report comes as a study from IT recruitment agency CV Screen finds that permanent IT salaries have risen by five percent over the last 12 months, with the average salary for an IT professional now at £38,946.
According to the monthly Report on Jobs, from KPMG and the Recruitment and Employment Confederation (REC), the rate of permanent salary inflation accelerated to the highest for eight months in March, although it was still slightly less than the survey’s 13-year average.
Pay for contractors remained “muted” in contrast.
However, despite the starting pay increase being good news for workers, Kevin Green, chief executive of the REC, said that it has the potential to create a longer-term problem for businesses.
“The increase in starting salaries for permanent staff is due to two factors. Firstly, people changing jobs are clearly looking for higher pay to compensate for inflation and secondly, the growing competition for quality candidates in some sectors, such as IT, engineering and finance.
“While it’s important to reward quality candidates appropriately, it’s important that this trend doesn’t limit opportunities for job creation or hinder business growth in the future,” he said.
Across all industries, there was a slower rate of growth in the number of staff being appointed compared to the 10-month high experienced in February. This is despite the demand for both permanent and contract staff being stronger in March.
The report is based on a survey of 400 UK recruitment consultants and uses a figure to represent demand in each job sector. A figure above 50 indicates an increase on the previous month.
In March, the strongest growth in demand for permanent staff was in the IT sector, with a figure of 68.5, up from 64.9 at the same time last year.
Meanwhile, IT was the sector to see the second highest growth in demand for temporary workers, behind engineering and construction, with a figure of 65.0. This had also increased from March last year (58.2).
Despite the general growth in the jobs market, Bernard Brown, partner and head of business services at KPMG, said that the private sector is not offsetting the public sector losses as yet.
“The UK jobs market continued to expand in March albeit at a slower pace. The latest figures show that the job market recovery remains volatile. Some private sector employers are hiring again but at the moment not in numbers sufficient enough to absorb the job losses in the public sector,” he said.
CV Screen’s pay survey was based on more than 7,000 UK job adverts during the first quarter of 2011, and covered 50 different IT roles.
The agency said that salaries have been increasing as employers looking to offer more competitive rates in order to secure the best talent.
Matthew Iveson, managing director of CV Screen, believes that the trend for higher salaries will continue.
“We strongly believe that rising inflation and the increased cost of living will push IT wages up further and therefore the salary increase trend will continue well into 2012,” he said.
In addition, CV Screen noted that the number of registered vacancies had increased by more than 25 percent in Q1 2011, compared with Q1 2010 – but that the number of applicants had fallen.
“This increase is very encouraging but it must also be noted that the number of applications per role has actually dropped by around 20 percent. The employer-driven market of a year ago is now shifting towards a candidate-driven market, which is driving salaries up.”
Meanwhile, CV Screen has noticed a lack of quality candidates for certain IT roles, especially in the .NET, PHP and Java development sectors.