Last reviewed 18 August 2021

Rising demand for staff and a further marked drop in candidate supply has led permanent starting salaries to increase at a quicker pace according to the latest UK Report on Jobs survey by KPMG and the REC (Recruitment and Employment Confederation).

The rate of salary inflation was the sharpest seen in nearly 24 years of data collection, the Report highlights.

At the same time, the availability of candidates continued to decline rapidly in July, driven by concerns over job security due to the pandemic, a lack of European workers due to Brexit and a generally low unemployment rate.

REC Deputy Chief Executive, Kate Shoesmith, said: “This month’s data confirms that it is a good time to be looking for a new job. Employers are desperate to find good candidates for the many jobs on offer and this is reflected in starting salaries rising at the sharpest rate since the survey began in 1997. This will likely motivate more people to be on the lookout for new opportunities”.

Data broken down by region showed marked increases in permanent staff appointments across all four monitored English regions with London seeing by far the quickest expansion, the fastest on record.

Demand for permanent staff rose across all of the 10 monitored job categories during July, led by IT & Computing.

Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK, said: “We know that reskilling and upskilling is needed to help people move between sectors, and there’s no doubt the ‘pingdemic’ has added an extra dimension to the recruitment challenge. Plus, with furlough due to end soon, there may be a downward pressure on pay to come”.

Comment by Kate Palmer, HR Advice and Consultancy Director at Peninsula

With many businesses in the same boat, as coronavirus restrictions are eased across the UK, it is not shocking that employers are having to raise starting salaries in order to attract the best candidates as they reopen for trade.

Employers will have growth in mind at this time, but they are also likely to prioritise plans to sustain these sharp salary increases to retain new hires.