UK recruiters slow pace of pay growth in March, REC survey shows

LONDON  – Britain’s labor market showed signs of slowing in the sharp pace of pay growth in March and a shortage of candidates eased for the first time in two years, according to a survey of recruiters published on Wednesday.

The Recruitment and Employment Confederation/KPMG said increases in starting salaries for permanent staff were the second-weakest in nearly two years, but remained high in historical terms.

Starting salaries for temp roles eased moderately to a three-month low.

The Bank of England, which has raised interest rates 11 times since December 2021 to curb a surge in inflation, is worried about cost pressures in the jobs market but has said it expects pay growth to weaken.

REC’s monthly permanent placements index came in at 49.3 last month, the slowest fall since last September but still below the 50.0 no change level.

Billings for temporary workers, which often increase when employers are cautious about the outlook, rose at the fastest pace in six months.

Neil Carberry, REC’s chief executive, said the jobs market was now flat rather than falling and he expected pay to keep on growing as shortages in some skills and cost-of-living pressures persist.

“The continuing fast rate of pay growth is likely reflective of the impact of inflation on wage offers, as well as low labor supply,” Carberry said.

Vacancies ticked up further in March although the pace of growth eased slightly from a four-month high in February.

The availability of staff rose for first time since February 2021, with some recruiters saying redundancies helped increase the supply of workers.

“Candidate availability improved for the first time in over two years as people regained the confidence to look for new roles, but economic uncertainty caused firms to make redundancies and often opt for temporary hires over permanent placements,” Clare Warnes, partner for skills and productivity at KPMG UK said.

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