Average salary growth doubled in June, suggesting the labour market recovery is picking up speed, according to the latest UK Job Market Report from Adzuna.co.uk
Advertised salaries rose to £32,933 in June 2014, growing 1.7 percent between May and June – more than double the rate of growth witnessed between April and May (0.6 percent). It was the third consecutive month in which advertised salaries have risen. The volume of available vacancies is also rising. There were 839,950 advertised positions in June, 22.3 percent more than twelve months ago, when 687,039 positions were available. On a monthly basis, vacancies increased 2.6 percent, helping to drive the unemployment rate down to 6.5 percent, its lowest level in six years. And in a final sign of economic good news, the ratio of jobseekers to vacancies fell to a post-recession low. There were 1.21 jobseekers for every advertised vacancy in June 2014, compared to 2.10 twelve months ago. It was the lowest ratio of jobseekers to vacancies since May 2008.
Andrew Hunter, co-founder of Adzuna, explains: “Greater economic certainty is finally filtering through into a pick-up in salaries. Employers are boosting wages as top talent becomes harder to source, hoping that by supplementing salaries they will attract the best staff. At the same time, the pace of job creation is pulling ahead of the number of workers looking to change jobs. Competition for jobs is falling as a result. The post-recession era of tough rivalry between job hunters is drawing to a close, as the power switches into the hands of those looking to move, rather than those looking to hire.”
Despite the monthly salary uptick, real wages are yet to reflect an increase. Inflation rose to 1.9 percent in June, but wages are still some way off showing year-on-year growth. Average salaries fell 1.2 percent year-on-year in June, equivalent to a drop of £1,054 over the last twelve months. Andrew Hunter, co-founder of Adzuna, explains: “An almost three-fold increase in wage growth compared to May is encouraging, but there is no room for complacency. Even with the recent advertised salary growth factored in, real wages have fallen by over a thousand pounds in the last year. Until wages finally leapfrog inflation, many will continue to feel the economic pinch.”
Capital catching up
A recovering London labour market has helped bolster monthly salary growth. In June, London average salaries rose by 1.5 percent to £40,446, closing the gap on the CPI rate, which stood at 1.9 percent. Average salaries in the capital have risen 2.9 percent since the beginning of the year. In terms of vacancies, the capital has witnessed stellar increases. There were 188,558 advertised vacancies in London in June 2014, 36 percent higher than 138,971 twelve months before. The ratio of jobseekers to vacancies in London has also significantly fallen. There were 0.78 jobseekers per vacancy in London in June, compared to 1.48 a year ago.
The Energy, Oil & Gas ranks as the best sector for wage growth in London, having an average salary of £53,591. Andrew Hunter, co-founder of Adzuna, explains: “The London labour market is a honeypot for national and international talent. But workers in London suffered disproportionately in the years following the financial crash: while wages have remained stagnant, London property prices, and rents, skyrocketed. A pay rise for the capital’s workers will give them a chance to refill their depleted savings at last.”
Graduate salaries growing
Across the UK, the sector experiencing the strongest revival in terms of salary has been the graduate labour market. Graduate salaries increased 5.0 percent year-on-year from £23,590 a year ago to £24,762 in June 2014. Wages also picked up in the Trade & Construction sector. The average construction salary grew to £35,570 in June – up 3.5 percent year-on-year. This coincides with a strong month for the building and construction industry, which saw its fastest growth for more than four months whilst employing at record levels. Andrew Hunter comments: “Employers have timed salary increases in the graduate market to coincide with the flood of new graduates who have recently entered the labour market. As the talent shortage begins to bite, fostering quality entry-level talent has become all the more important. Upping graduate salaries is one easy way for employers to stand out from the competition when attracting high calibre entry-level candidates.”
Salaries across the nation
Ten out of twelve UK regions saw annual salary growth in June, with Wales (+19.3 percent), the South West (+5.1 percent) and the North West (+3.4 percent) improving the most. Manufacturing continues to power the economic recovery of the North of England and Scotland as job creation in the sector reached a three-year high. On the disparity in salary growth across the nation, Andrew Hunter remarks: “The strong salary growth outside of London and South East is the untold story of the economic recovery. The recovering Manufacturing sector and regional job growth funds are boosting areas across the country. Birmingham has been announced as the construction hub for HS2, which will further lift the labour market in the Midlands by generating 1,500 new jobs. Perhaps we can now begin to dispel the myth that the economic recovery has not reached areas outside of London.” Despite the South falling behind other parts of the UK in salary growth, the best cities to find jobs remain in the south of England. Cambridge, Guildford and Winchester still rank top for jobseekers per role, while northern cities such as Salford and The Wirral continue to prove hard areas for finding work.