Businesses Get Respite as Wage Growth and Skills Gap Improves

9th May 2018.

Workers in the UK benefited from a sharp increase in pay growth in April, according to a survey of the recruitment industry.

The business community has finally been offered relief from the doom and gloom that has been plastered across the country in the last few years. Wage growth has persistently remained stagnant, with households struggling to afford the essentials on a limited pay packet. Now inflationary pressure has now eased, and the possibility of an interest rate hike has reduced, wage growth has the space to grow.

According to research from the Recruitment and Employment Confederation (REC), pay growth for both temporary and permanent picked up last month. The research further revealed that permanent salaries hit an index score of 60.5, which is up from the ten-month low of 60.0 in March. Temporary positions also experienced the highest increase of almost two years, with skills shortages in construction industries influencing the pay rise.

Unfortunately, problematic sectors such as retail have seen little change in their hiring behaviour, with some retailers even forced to cut their workforce in half to satisfy Company Voluntary Arrangements. At the Credit Protection Association, our credit management products offer business members an alternative to a CVA, giving them an option to improve their cash flow and not only keep their staff their jobs but return them to the high street stronger than ever.

REC director of policy Tom Hadley said: “Demand for staff is still on the rise in every other sector [except retail], but candidate availability keeps dropping. Our data shows that employers are paying more to attract the right people into their vacancies.

“For individuals, now is a good time to look for a new job, as you are in a strong position to negotiate higher pay.”

Concerns had been raised that the increasing costs of auto-enrolment for employers might lead to smaller pay rises for workers.

However, according to a Department of Work and Pensions survey, just 11 percent of employers had passed on lower wage rises in order to offset the cost of auto-enrolment.

This recent good news will make a difference for the general business landscape. Larger pay packets will hopefully lead to a heightened consumer confidence which will have a positive impact on retail and other customer service sectors of the UK.

Squeezed households subsequently squeeze businesses, leaving none with the breath or energy to compete with our international rivals. If the UK is to navigate the post-Brexit landscape, it is important our competitive edge is kept intact.

At the Credit Protection Association, our services can not only provide aid when business is going bad but also protect it when it is good. Our debt recovery services free up cash flow to help business owners who have not gained an advantage from recent economic upturns. Our credit checks, status reports and company directories also strengthen our members’ financial position, ensuring there are no accounting errors or late payers that could derail success.