UK Hiring Slows As Skills Shortages Bite, Recruiters Say

(Reuters) - The number of Britons finding permanent jobs via recruitment agencies grew at its slowest rate in nearly two years last month but pay continued to rise rapidly as businesses struggled to find qualified applicants.

The Recruitment and Employment Confederation, an industry body, said its members reported growth in permanent placements falling to a 20-month low, while billings for temporary staff grew at their slowest rate in three months.

"Competition for skilled workers is driving up pay," said REC chief executive Kevin Green. "With record levels of employment and falling inflation, this means many workers should feel better off in 2015 than they did in 2014," he added.

The REC findings give a more upbeat picture than official wage data, and will interest the Bank of England as it puts the final touches on new forecasts due next week.

While headline inflation in Britain has tumbled to its lowest level in 14 years, some policymakers are worried that labor market pressures could cause it to rebound rapidly.

Britain's unemployment rate has fallen sharply over the past year and a half, hitting its lowest level in more than six years at 5.8 percent in the three months to November.

But until recently, wages have lagged behind inflation on the main official measure, suggesting that firms have had little trouble attracting staff.

The REC survey showed that businesses looking to hire new staff were offering the biggest pay increases in four months.

"Rising demand, skill shortages and higher numbers of senior-level placements were cited by panelists as factors underpinning growth of salaries," the REC said.