Starting salary inflation holds close to record high

Jobs Outlook

May 19, 2022

Candidate and skills shortages continued to place substantial upward pressure on rates of starting pay as firms competed for staff.

Neil Carberry, Chief Executive of the REC, said: “The labour market has been tightening for months on end, driving near-record growth in starting salaries for new staff. With vacancy numbers also historically high, this is a great time to be looking for a job – and a pay rise to help meet the rising cost of living.

Candidate availability fell for the fourteenth month in a row. Permanent candidates fell at a faster rate than that of temporary billed staff. There was a further steep increase in overall vacancies during April 2022. Permanent staffing demands continued to rise at a slightly quicker pace than what has been seen for temporary workers. Reports have shown that low candidate availability and skill shortages had weighed on the abilities to fill roles.

The UK employment rate increased by 0.1 percentage points on the quarter to 75.7% but is still below pre-coronavirus (COVID-19) pandemic levels. Most interestingly of all is seeing that the unemployment rate for January to March 2022 decreased by 0.3 percentage points on the quarter to 3.7% and for the first time since records began, there are fewer unemployed people than job vacancies. 

The number of job vacancies in February to April 2022 rose to a new record of 1,295,000. The estimated payrolled employees for April 2022 is showing a monthly increase of 121,000 on the revised March 2022 figures, and is now at a record 29.5 million.

Data from the Office for National Statistics (ONS) indicated that employee earnings (including bonuses) increased +5.4% on an annual basis in the three months to February 2022. This was stronger than the +4.8% rise seen in the prior three-month period, and the fastest rate of pay growth since the three months to September 2021.

Source; KPMG and REC, UK Report on Jobs