84% Surge in Job Applications as UK Heads for a Pay-rise
Above: Bank of England Governor Mark Carney may well have to respond to faster-than-forecast growth in wages during 2018. © Simon Dawson, Bloomberg, Bank of England
UK workers are now ready to make their move in the labour market, which one Bank of England hawk believes will help push pay higher in 2018.
Job application rates were seen soaring by a "staggering" 83.6% in January 2018, when comparing findings with December 2017, report CV-Library.
The latest job market data from CV-Library, a leading independent job site, provides initial evidence that UK workers are growing in confidence to the extent they are willing to move jobs in order to increase their pay packet.
The behaviour is in line with forecasts from the Bank of England's Michael Saunders who believes UK pay will accelerate in 2018 and place upward pressure on UK inflation rates. This will in turn require the Bank of England to respond by raising interest rates.
The findings from CV-Library indicate that despite professionals remaining cautious about moving jobs in recent months, many are now ready to make their move in the labour market.
In fact, most of the UK’s major cities witnessed stand out growth in applications, with the cities that saw the biggest increases including:
- Manchester – 92% growth in applications
- Birmingham – 90.4% growth in applications
- Edinburgh – 90.2% growth in applications
- Southampton – 85.9% growth in applications
- Bristol – 83.7% growth in applications
- Brighton - 82.3% growth in applications
- Sheffield – 80.6% growth in applications
- Nottingham – 80.1% growth in applications
- Portsmouth – 78.3% growth in applications
- London – 77.2% growth in applications
Some of the nation’s key industries also saw application rates soar in January, with marketing (93.1%), IT (93%), manufacturing (90.1%), accounting (88.4%) and construction (87.1%) all seeing impressive growth month-on-month.
CV-Library report that recent months have seen application rates remain stagnant, with the ONS reporting that the unemployment rate was at the joint lowest since comparable records began back in 1971.
Lee Biggins, founder and managing director of CV-Library says this is not surprising given the current state of the economy, in which many are looking for stability from their current employer.
Indeed, Delivering a speech at the launch of the Financial Intermediary and Broker Association at BAFTA in London in January, the Bank of England's Michael Saunders argued that employees have been reluctant to move between jobs owing to the negative experiences of the financial crisis of 2008 and the ensuing recession.
This reluctance means workers are ultimately likely to be stuck at a certain wage rate for extended periods with employers finding they don't need to increase pay to hold on to valuable staff.
Saunders however believes 2018 will see a more confident workforce, that will be brave enough to head out to search for greener pastures, and in the process lift UK wages.
“While the end of the year is traditionally a quieter time for recruitment, our Q4 job market report revealed that businesses were still working hard to attract talented candidates last quarter. This determination has clearly paid off and candidates have come back in full force this January, with application rates seeing staggering increases across the UK,” says CV-Library's Biggins.
Businesses also remained confident in January, with nationwide job vacancies seeing an impressive increase of 59% month-on-month, and 11.2% year-on-year. Despite this, advertised salaries for new roles fell by 0.9% month-on-month and 1.8% year-on-year.
"This impressive data suggests that both candidates and businesses are feeling secure right now and we hope that these figures are an indication of what’s to come as we progress further into 2018,” says Biggins.
Saunders - who sits on the Bank of England's Monetary Policy Committee says UK workers will likely see their pay-packets rise steadily in 2018 as workers from the EU opt to not come to the UK in the numbers they did before the Brexit vote.
The observes that since the recession people have been too afraid to move jobs in search of higher pay, this has allowed employers to sit on staff without having to raise rates to keep them.
But, it is believed employees are starting to venture out and seek greener pastures, and this will in turn require employers to start digging deeper to hold onto staff.
"In recent quarters, the number of job-to-job moves has returned to something like the pre-crisis norm," says Saunders.
Pay growth in 2018 is forecast to stay well below the pre-crisis norm of 4% or so. "But, I suspect it is more likely to overshoot than undershoot the external consensus (which is for AWE growth of 2.6% in 2018 and 2.8% in 2019)."
Saunders is a leading proponent for higher interest rates on the Bank's MPC, and could certainly lead the charge in advocating for more than one rate rise in 2018, should pay data go the way he expects.
