Summary of the editorial from IDS Pay Report 963, October 2006

Skills shortages boost pay rates in value-added sectors of economy

Parts of the UK economy are still finding it difficult to attract workers with the necessary skill levels required. New IDS surveys of pay in two very different sectors – call centres and engineering – show that pay levels have risen on the previous year, against a backdrop of sometimes severe recruitment and retention problems, particularly for more highly-skilled workers. In many ways, these areas could be regarded as ‘value-added’ sectors of the economy, with firms operating in markets where competitive advantage is gained as much from the skills of employees as the relatively complex products or services being traded, whether this be in car manufacture or insurance.

Arguments about the state of the labour market have raged back and forth over the last few months, with unemployment rising at the same time as employment levels have risen, and the press is full of debate about whether the impact of migrant workers from the EU accession countries in Eastern Europe is leading to a loosening of labour markets. However this is only part of the picture. Our findings on pay levels in call centres and engineering – two important sectors – provide significant support for the view that the labour market remains generally strong.

... the full editorial can be read in IDS Pay Report 963