LONDON (Reuters) - British firms are upping salary offers for new permanent staff at the fastest rate in almost 17 years as the pool of suitable candidates dwindles rapidly, a monthly survey of recruitment agencies showed on Tuesday.
The figures from the Recruitment and Employment Confederation (REC) trade body also show widespread pay increases for temporary staff, and could help pave the way for higher Bank of England interest rates.
However, previous strong readings from the survey have yet to be reflected in broader wage data for the whole economy collected by Britain's statistics agency.
So far this year official data has shown wages struggling to keep up with inflation.
The REC survey of 400 recruitment agencies showed that 38 percent reported firms offering higher salaries than a month ago, 58 percent saw little change and 4 percent reported lower salaries. On a seasonally adjusted basis, this gave the highest index reading since the survey started in October 1997.
"Once again employers seem ready to 'splash the cash' in what appears to be a desperate attempt to lure skilled staff from competitors," said Bernard Brown, a partner at accountants KPMG, who sponsor the survey.
Half of recruiters said that it was harder to find staff than a month earlier, while just 5 percent found it easier, leading to the weakest overall reading since the survey started.
The figures are likely to be of keen interest to the BoE, which is monitoring a wide range of measures of spare capacity in Britain's labour market to judge when to raise record-low interest rates.
Unemployment has fallen rapidly over the past year and hit a five-year low of 6.6 percent in the three months to April. But annual wage growth has been weak.
Even ignoring April's 0.9 percent reading - which was partly due to tax changes a year earlier - first-quarter wage growth of 1.9 percent barely matched inflation in the same period.
The BoE forecasts wage growth of 2.5 percent for 2014 as a whole - still well below Britain's pre-financial crisis average of 4.5 percent.
Other industry surveys have shown a more mixed picture of the labour market. Surveys of purchasing managers in the services and construction sectors last week showed record hiring.
But the British Chambers of Commerce reported fewer firms looking for staff or facing recruitment difficulties.
The REC said the greatest demand for staff was in the engineering and construction sectors, followed by a shortage of accountants. The weakest demand was in hotels and catering.
(Reporting by David Milliken; Editing by Ruth Pitchford)