UK Starting Salaries Rise at Slowest Pace in Nearly 3 Years
Starting salaries for new employees in the UK are increasing at the slowest rate in 32 months, according to a recent poll conducted by KPMG and REC. The survey of recruitment firms revealed that employers are becoming more cautious and cutting back on their hiring plans, leading to a cooling of salary growth.
While there is still competition for candidates with sought-after skills, recruitment firms have reported that clients are facing greater budgetary pressures. This has resulted in the slowest rise in permanent starters’ pay since March 2021, with starting salary inflation easing in all four monitored English regions except the Midlands.
The report also highlighted a slowdown in hiring, with the number of vacancies dropping for only the second time since February 2021. As a result, there has been a significant increase in the availability of candidates, marking the largest rise in nearly three years.
Interestingly, the pay for temporary workers has also been affected, rising at the lowest rate in 33 months. While temporary wages fell in the North of England, they saw the fastest pace of growth in London.
The findings suggest that the UK labor market is weakening, which may be concerning for workers. However, it could be viewed as positive news for the Bank of England as it considers whether interest rates are high enough to bring down inflation to its 2% target.
Claire Warnes, a partner at KPMG, commented on the situation, saying, “Businesses want to plan for the year ahead, but the prospect of faltering UK economic growth means the certainty they need isn’t there. This is now impacting starting salaries.”
The report also raises concerns about the impact of high interest rates. With the Bank of England expected to maintain its current stance, businesses will need to remain resilient to navigate this period of uncertainty.
Meanwhile, attention is turning to the US job market as investors eagerly await the final non-farm payroll report of the year. November’s report is anticipated to show an increase in hiring after a temporary slowdown earlier in the autumn.
US payrolls are expected to have risen by 180,000 jobs, surpassing the 150,000 increase seen in October. However, there are concerns that wage growth could slow, with average earnings projected to decrease from 4.1% to 4%.
The non-farm payroll report will be closely monitored in the markets as an indicator of whether the US central bank has raised interest rates sufficiently to curb inflation and achieve a ‘soft landing’.
More detail via The Guardian here… ( Image via The Guardian )