UK firms face increased pressure in hiring tech staff amidst a broader worker shortage, a technology recruiter has said.
The UK registered more job vacancies than unemployed workers for the first time on record in the first quarter of 2022, according to figures released by the Office of National Statistics (ONS) on Tuesday morning.
The situation threatens to further drive up inflation, the Bank of England warned, as businesses may be forced to increase pay to attract workers, and then pass on their additional costs to consumers.
The unemployment rate dropped to 3.7 percent in the first three months of the year, the lowest figure since 1974.
But businesses are struggling to fill positions after hundreds of thousands left the workforce during the pandemic.
This situation is compounded for the tech industry by a skills shortage that has seen tech job vacancies rise by nearly 200 percent since 2020, according to figures from tech professional body BCS.
This has put pressure on companies to increase salaries for in-demand roles such as software engineers and data analytics professionals, according to Bev White, chief executive of Nash Squared, which operates the tech recruiter Harvey Nash.
As a result even new recruits are seeing higher rates in tech jobs, with companies such as Meta offering amongst the highest starting salaries in the UK.
“Technology employers have had to increase salaries for key roles well above the rate of inflation because of intense competition for candidates,” White said.
In the general economy, the ONS found a 7 percent rise in average weekly earnings for the quarter through March, mainly due to an increase in bonus payments.
In March alone pay rose 9.9 percent, the biggest hike since records began more than two decades ago.
Even so, pay continues to lag behind inflation, with the Trades Union Congress calculating that real pay fell by £68 per month from March 2021, with a £131 per month drop for the public sector.
Bank of England governor Andrew Bailey – whose salary is around £575,000 – told MPs salary rises could feed into inflation, disproportionately affecting lower-income households.
For such households it’s “particularly difficult where inflation is concerned on things like energy and food”, he told Parliament.
While acknowledging “widespread skills shortages that aren’t going to disappear overnight”, White highlighted that there are positives for the tech sector, which has been the leader for UK job creation over the past three years.
The number of women joining the sector has risen significantly, and half a million women are now employed in tech, she said.
Increased and targeted government funding into digital skills was announced in last year’s Queen’s speech, while the industry is investing more in staff skills and apprenticeships.
White said employers are increasingly adapting to the trend toward remote working, recognising that the situation requires managers with “soft skills” such as communication, empathy and coaching abilities, “rather than just a technical background”.