UK employers raise pay as Brexit skills shortage bites

Workers sit in the sun during a lunch break in front of Tower Bridge. - Reuters filepic

LONDON: A fall in people coming to Britain from other European Union countries has aggravated a shortage of workers and forced employers to raise starting salaries at the fastest pace in nearly two years during August, a survey showed on Friday.

The monthly report from the Recruitment and Employment Confederation (REC) and accountancy firm KPMG showed companies struggled to fill their vacancies and turned increasingly to recruitment agencies.

Starting salaries for permanent staff rose in August at the fastest pace since October 2015, something likely to be noticed by the Bank of England officials which is watching for signs of pay growth as it considers when to start raising interest rates.

BoE officials have predicted wage growth will pick up in 2018 after falling in inflation-adjusted terms this year.

British households have seen their spending power squeezed by a rise in inflation caused in large part by the fall in the value of sterling since last year's Brexit vote.

But REC said wage increases might not be sustainable if companies cannot get the people they need to grow.

Britain's biggest carmaker Jaguar Land Rover told Reuters on Thursday it is feeling Brexit's effects with non-British EU workers at its plants demanding better terms to compensate for uncertainty about their future in the country, and international suppliers less willing to commit to the country.

"There is a significant shortage of people to fill blue collar roles such as drivers, electricians, and construction workers, and this is being exacerbated by a fall in net migration from the EU," said Kevin Green, REC chief executive.

Net migration to Britain fell to its lowest level in three years in the 12 months to the end of March, with more than half the drop caused by EU citizens leaving and fewer arriving since the Brexit vote.

A leaked government document showed Britain is considering measures to restrict immigration for all but the highest-skilled EU workers, in plans that business groups described as alarming. - Reuters