So what is driving these figures up?
The TE report explains that several temporary factors have caused this inflation in average weekly earnings, which also includes bonuses.
1. The influence of COVID-19 on the job market
At the beginning of the pandemic, particularly the months that today’s figures are based on, earnings were pushed down, affected by the spread of the virus. This means that the figures now are considerably higher than the previous year.
2. A drop in candidate supply & high demand for staff
As KPMG states, candidate numbers fell significantly, perhaps due to continuing uncertainty and concerns over job security. There is also the influence of Brexit as a key factor in the lessening supply of workers in the UK market. As a result of this, there has been a sharp increase in the demand for new hires, which has subsequently driven up salaries.
3. A fall in the number of lower-paid employee jobs
In the last year, the staffing industry has seen a significant reduction in the number of lower-paid roles, which has pushed up the average earnings. This is likely a consequence of the pandemic, where nearly a third of lower-paid employees lost their jobs or were furloughed, compared the 10% of top earners.
With the world coming out of a global pandemic, these figures aren’t necessarily a surprise. If you sit and consider why the figures were so low last year (people losing their jobs or being furloughed) and the low number of job seekers in relation to the high demand for workers this year, the figures are hardly ground-breaking.
However, these figures promise is a positive outlook for the job markets of both the US and UK, particularly for job seekers.
“With salaries for new hires increasing at their quickest rate in 24 years and a sharp rise in permanent placements in July, job seekers should be taking advantage of the buoyant market to land their dream role.” Claire Warnes, Partner and Head of Education, Skills and Productivity at KPMG UK
Even though we can expect a ‘downward pressure on pay to come’, this boost in average weekly earnings gives hope to a more stable future for work and employment following a very uncertain time.