Employers offering pay rises of 10% in industries hit by staff shortages, says economist

Jack Kennedy, economist with Indeed.com, also said 1 million people are ‘missing from the labour market’

EMPLOYERS in industries hit by skills shortages are offering annual pay rises of up to 10% in an effort to attract staff, according to a leading economist.

Jack Kennedy,UK economist with Indeed.com, told GB News: “The labour market remains incredibly tight at present, unemployment remains very low at 3.8%, we still have less than one unemployed job seeker per vacancy.

“That’s really being reflected in a lot of the staff shortages and hiring difficulties that we’re continuing to see throughout the economy.

“We’ve seen that historically, really elevated levels of vacancies have been affording workers lots of opportunities to move between jobs.

“We’ve seen really strong rates of jobs, job switching, and a lot of industries that have really been bouncing back since the pandemic, it’s the re-opening of the economy, and have been ramping up hiring very, very strongly.

“That’s been affording workers lots of opportunities to move between jobs.”

Asked if employers are paying more in an interview during Breakfast with Eamonn Holmes and Rosie Wright, he added: “They are.

“We’re seeing that particularly in the sectors that are struggling to hire the most, they’ve really having to be competing on pay and increasing salaries.

“We’ve seen that in sectors like hospitality, manufacturing, construction, retail warehousing, a lot of those lower paid sectors have really been having to increase pay.

“Our figures suggest annual wage increases between seven and 10% to try and attract the workers that they need to fill those gaps.”

He added: “Ultimately, if companies really are going to have to eventually pass on some of these higher costs to consumers.

“We are starting to see that very much reflected in higher prices for consumers, we see that in the inflation figures, inflation is already in excess of 9% and predicted to head even higher over the winter, particularly as energy prices soar even further in October and then in January, so really consumers budgets certainly being squeezed.”

Asked which industries are hit by staff shortages, Mr Kennedy said: “Data suggests that the biggest shortages have been in sectors like hospitality, retail, loading and stocking, construction, manufacturing.

“We’re seeing that demand for workers really rebounded very, very strongly in recent months, that’s really exceeded the supply of workers available to come and fill those vacancies.

“We’ve seen a big increase in rates of economic inactivity, since the pandemic we’ve seen a lot of workers, particularly older workers.

“The over 50s have been less active in the job market and a lot of people have taken early retirement, so we’re facing almost a million missing workers from the UK labour market.”

He added: “A lot of people sort of re-assessed their life priorities during the pandemic and a lot of older workers did opt to drop out of the labour market and perhaps rely on either savings or early drawdown of pensions.

“But clearly, we’re in a cost of living crisis that’s predicted to only get worse over the coming quarters, so one thing we’re really keeping a close eye on is any signs of those cost of living pressures starting to draw more people back in from the sidelines of the labour market.”

He said: “We’ve seen employers really having to greatly sort of reassess traditional hiring practices and part of that is using more inclusive language in job adverts…trying to make jobs more appealing to them. 

“Some of these people may need re-training if they’ve been in a particular industry for a long period of time. They may need some encouragement and support to help them transition into new sectors and learn new skills.

“All of that is something that employers are really being prompted to do by the incredibly tight labour market to re-assess, to try and bring in the workers they need.”