Latest ONS employment figures show competition for talent has “swung the pendulum away from the employer”, according to Phil Sheridan, UK managing director of staffing agency Robert Half.
The ONS figures for May to July 2015 show 22.74 million people working full-time in the UK, 361,000 more than for a year earlier. The unemployment rate was 5.5%, unchanged compared with February to April 2015, but lower than for the same time last year (6.2%).
Sheridan said a skills shortage is behind the figures. “It is not surprising that earnings have returned to their fastest rate of growth since 2009, as competition for talent has swung the pendulum away from the employer and there is a definitive shortage of skilled candidates for middle and top tier positions,” he said.
“Our research shows in the last year 83% of CFOs admit to offering salaries above what they originally planned to secure talented job candidates, while 33% of those have had to do so frequently. There is simply not enough highly specialised talent to go round, as 92% of CFOs admit they are challenged in finding skilled professionals.”
Fawad Razaqzada, technical analyst at www.cityindex.co.uk, suggested that the data potentially indicates an upcoming interest rate hike. “The cheerful data comes on the back of a string of disappointing macro numbers of late and removes some concerns about the health of the UK economy,” he said. “With earnings growth now accelerating, it is only a matter of time before consumer price inflation responds. In other words, we are getting closer to a rate hike from the Bank of England, which could possibly happen in the first quarter of 2016.”
CIPD chief economist Mark Beatson said the figures suggest an increase in productivity, and that in his view interest rates would remain low. “As the economy was still growing strongly in the second quarter of 2015, stable employment levels suggest that productivity has been growing,” he said. “If this is the case, it helps to make average earnings growth sustainable.
“The latest figures have been boosted by earnings in construction and by bonuses, especially in financial services, both consistent with a growing economy. With interest rates expected to remain very low, employers should continue to invest in technology, systems and workforce skills if they wish to avoid the prospect of increased skill shortages.”
