British firms are increasing salaries rapidly to overcome the difficulty of attracting employees as pandemic restrictions are relaxed with increasing inflation pressure.
According to data from the Federation of Recruitment and Employment, KPMG and IHS Markit, the initial salary increase was close to the highest level in seven years, and all regions in the UK. The job site Indeed stated that, in particular, hospitality companies are increasing salaries, and some companies offer login bonuses to attract employees.
“We are seeing wage inflation directly linked to demand,” said Niki Turner-Harding, senior vice president of the recruitment firm Adecco U.K. and Ireland. She said those hiring many people quickly find that raising pay is the “only option.”
The survey results have increased concerns that the rapid reopening of the economy will increase price pressure and cause the Bank of England to stop its stimulus plan. The Office of Government Budget Responsibility is also concerned that chronic labor shortages are due to Covid-19. The decline in immigration levels after UK’s exit from the European Union will harm the economy.
Central bank governor Andrew Bailey warned that labor market rigidities in certain occupations could increase wage pressures, viewing them as a source of friction that could slow the recovery.
British Prime Minister Boris Johnson’s decision to remove most social and work restrictions by July 19 has sparked a hiring boom. A survey by the British Chambers of Commerce found that more than half of companies tried to hire employees in the second quarter, and 38% of companies expect to expand in the next few months, higher than the pre-virus ratio.
“As firms are released from lockdown restrictions, the skills shortages they experienced before the pandemic are once again starting to bite,” said Jane Gratton, head of people policy at the BCC.
Some recruiters report that after Brexit created new barriers for those who wish to work in the UK, the number of EU workers has dropped significantly. The lockdown during the pandemic changed employment patterns and led many people to follow different occupations outside the industries most affected by restrictions.
REC stated that the demand for long-term employees in June grew at the highest rate since registration began in 1997. Compared with the second quarter in 2019, the median wages reported by hotel employees in June increased by 5.6%. Indeed data showed. These workers now earn £9.50 an hour, which is higher than the minimum wage of £8.91. In fact, evidence of wage increases for drivers and construction workers was also found.
“Companies are trying all sorts to encourage applications — even paying people to turn up to interviews,” said Novo Constare, founder and chief operating officer of the company’s flexible working platform, Indeed Flex. “A lot of people may have moved sector. Although they may want to return to hospitality, they may be scared of being let go or put on furlough again. They’re not ready to make that jump back yet.”
Source: Forex Factory