Concern about availability of migrant workers after Brexit as companies struggle to recruit

This article is more than 1 year old

This article is more than 1 year old

Growing skills shortages in the UK jobs market are starting to drive up wages, according to a survey, as more companies across the country report difficulties finding staff.

In a sign that workers’ pay is gradually rising after a “lost decade” of sluggish growth since the financial crisis, private-sector employers said they were expecting to award annual pay increases of about 2.5% on average this year, up from 2% at the end of last year.

The research compiled by the Chartered Institute of Personnel and Development and the recruitment group Adecco showed that basic pay expectations had increased to the highest level since it began tracking wage agreements in 2012.

Almost three quarters of the 1,254 employers surveyed said they were finding it tough to fill vacancies in the first quarter of 2019, with manufacturing companies having the greatest difficulty.

UK wages worth up to a third less than in 2008, study shows Read more

Despite growing concerns about the potential fallout for the British economy from no-deal Brexit, unemployment has hit the lowest rate since the mid 1970s, while record numbers of people are in work. Figures from the Office for National Statistics show that pay growth across the country has risen to the highest level in a decade, as companies raise pay to attract workers.

The latest official data show that the number of unemployed people per job vacancy has dropped to 1.6, down from 5.8 in 2011.

Growing numbers of companies have expressed concern about the post-Brexit immigration system curtailing the number of migrant workers available to hire. Net migration from the rest of EU to the UK has slumped to a six-year low, exacerbating the difficulties facing companies looking to hire staff.

Two-thirds of private sector firms in the CIPD/Adecco survey had increased their starting salaries in response to recruitment challenges, up from 56% in the final three months of last year.

Keeping up with inflation was the main reason driving the expectations for increases in pay for the year ahead, followed by the need to match wages at other companies. While inflation has eased in recent months, dropping to 1.8% in December, the rate of price increases rose to the highest level in five years following the Brexit vote, putting pressure on household finances.

Jon Boys, labour market economist at the CIPD, said: “The labour market is surprisingly robust. There are skills shortages and companies are struggling to get the talent they need – that’s what’s driving this increase in pay growth we’re seeing.”