UK firms raise starting salaries by most since June 2015 - REC

FILE PHOTO - Workers cross London Bridge during the morning rush hour in London, August 16, 2017. REUTERS/Toby Melville

LONDON (Reuters) - British companies are raising the salaries they offer to new permanent staff at the fastest rate since June 2015 due to a shortage of good-quality staff, recruiters said in a survey published on Thursday.

The Recruitment and Employment Confederation said businesses were hiring staff at the joint-fastest rate since April 2015, and running into skills shortages.

“This increasing competition for good-quality staff is driving up starting salaries with employers willing to pay higher wages to attract the right people,” REC chief executive Kevin Green said.

So far there are only limited signs that widely reported staff shortages are leading to faster overall pay growth, and past REC reports of faster wage growth for new staff have failed to lift average pay rates.

Official data last month showed that average weekly earnings in the three months to November rose by 2.5 percent on the year, unchanged from the month before and well behind inflation of 3.1 percent.

The REC also said there was a slight slowdown in demand for temporary staff, which could signal future weakness.

Nonetheless, any pick-up in wages will be keenly watched by the Bank of England, which publishes its February interest rate decision and quarterly economic outlook later on Thursday.

Economists want to know if the BoE is paving the way for a rate rise in May to follow its first increase in borrowing costs in more than a decade in November.

In November the BoE forecast that wage growth would pick up to 3 percent by the end of 2018.

Reporting by David Milliken, editing by Andy Bruce