Firms say they are having to increase pay rates to recruit new staff, according to a report – despite a separate study suggesting that most workers believe their pay will not keep up with the cost of living this year.
Demand for staff continues to increase amid the easing of pandemic restrictions and improved confidence in the economy, say recruiters.
Staring salaries for permanent and temporary staff are being driven up, fuelled by a scarcity of candidates, said the Recruitment and Employment Confederation (REC) and KPMG.
Their survey of 400 recruitment agencies suggested that the growth in job vacancies has edged down to a nine-month low.
Neil Carberry, chief executive of the REC, said: “The jobs market is still growing strongly at the start of 2022.
“With competition for staff still hot, companies are having to raise pay rates for new starters to attract the best people, and the cost of living crisis means there is also more pressure from jobseekers who want a pay rise.
“Government’s role is to manage inflation, but also to ensure that they do not discourage investment. Now is the wrong time to be raising National Insurance, the biggest business tax.”
Claire Warnes, of KPMG, said: “The new year has seen the jobs market continuing where it left off, with a steep climb in permanent and temporary hiring.
“Meanwhile, a sustained decline in the number of suitable candidates has pushed starting salaries up for yet another month.
“Some sectors are continuing to show the strain of high demand for permanent and temporary roles.
“In particular, the IT and computing, and nursing, healthcare and medical sectors saw the greatest vacancy increases for yet another month, reflecting the significant workforce and skills challenges which these sectors have faced, and which the pandemic has accelerated.”
However, elsewhere new research suggests most workers believe their pay will not keep up with the cost of living this year.
A survey of 2,000 workers found almost one in three do not expect their wages to increase at all.
The TUC said pay growth is weakening just as household bills are set to “skyrocket”.
Almost two-thirds of respondents said they expect their pay will go up by less than the cost of living in 2022.
Fewer than one in five of those polled expect a pay rise that will match the cost of living.
Real wages are now in decline in most industries, with only finance, wholesale trade, technology and professional and administrative services bucking the trend, said the TUC.
General secretary Frances O’Grady said: “Everyone who works for a living ought to earn a decent living, but workers are suffering the worst squeeze on wages in more than 200 years.
“Britain needs a pay rise, not more pay restraint. The Government must urgently work with unions and employers to help families get through this cost of living crisis.
“The best way to give people long-term financial security is to get wages rising across the economy.”
Ms O’Grady added that energy prices are pushing up inflation, not wage demands.
“The last thing hard-pressed households need right now is for their pay to be held down.”
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