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The salary inflation bubble

Salaries are rising at their fastest rate for almost 7 years; as the supply of skilled labour is dropping at its sharpest rate since 2004, according to a report by KPMG.

The monthly 'report on jobs' produced by KPMG in collaboration with the Recruitment and Employment Federation (REC) in the UK reveals that the number of people putting themselves on the job market has dropped at its sharpest rate since 2004. They say this shortage of skilled labour is forcing employers to tempt talent with improved pay, rather than new found confidence pushing up wages.

The report's findings and conclusions mirror comments that Spinnaker has been making for some time now; employers who fail to invest in recruiting and training new entrants to the market risk courting a salary inflation bubble and losing a generation of talent.

A rising market and improved business confidence tend to produce short term reactions and short term thinking. It's a catch 22 situation for employers – they need to attract talented people with proven skills and track records, and often the only way to do this is to entice talent from the competition within increased salaries.

A failure to invest in new young talent however, only exacerbates the situation. We are already seeing significant demand and the signs for pay inflation for chartering and ship broking staff with 3-6 years’ experience caused by the hiring freezes during the recession.

When the market recovered in late 2009, Spinnaker found itself unable to capitalise on the market improvement. We vowed then that we would invest in and train new staff ready for the 'proper' end of the recession. Since that time we have hired 25 graduates on our trainee scheme with excellent retention levels, some of whom have already now qualified as consultants and will hopefully represent Spinnaker long after we old folk have retired to the golf course!

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