The severe lack of skills in the UK job market has forced many small businesses to increase employees’ salaries, new research has found.
The report, commissioned by the Chartered Institute of Personnel and Development (CIPD), found that the tightening labour market has an average fuelled wage inflation of 5.2 per cent a year.
According to the study, the main cause of salary increases was the lack of skilled candidates, with nearly a third of businesses questioned admitting they were highly concerned about the paucity of skills.
A further one in three employers said that they increased pay during 2003 specifically to try and retain high-quality staff, as competition for skilled workers heats up.
Overall, 36 per cent of those polled said they had increased pay offers last year in response to recruitment difficulties, compared with 23 per cent in 2002.
The CIPD said the trend is set to continue following last week’s interest rate rise, which is expected to further hamper firms’ attempts at recruitment.
An estimated eight million UK workers are not properly trained to do their jobs, a problem that affects around a quarter of all businesses.
Despite various initiatives by the government to raise skill levels, around 500,000 job vacancies exist in the UK due to a lack of suitable candidates.
Rebecca Clarke, of the CIPD, said that employers are wrestling with competing pressures.
“In the medium to long term, investment in the training and development of existing and new staff can help to reduce these short term pressures on wages.
“In the short term, employers will have to look to UK residents currently outside the labour market or immigrant workers if pressures on wages are to be relieved,” she said.
