February saw inflation of permanent staff pay hit an eight-month high as skills shortages meant the availability of permanent candidates fell for the 40th consecutive month.

Temporary and contract workers also saw pay rise – by the sharpest rate for 27 months. Availability for temporary workers also declined, though at a less marked rate than for permanent staff.

The findings come in the latest Report on Jobs from the Recruitment & Employment Confederation (REC) and KPMG.

Michael Carter, people services partner at KPMG said: “This month’s continued acceleration in pay is more grist to the mill for the interest rates hawks on the Monetary Policy Committee.

“However, there are also some tentative signs that demand for staff may be starting to ease, in which case pay pressures themselves should also start to lessen. The MPC needs to tread cautiously from here.

“As skills gaps continue to widen, employers need to ensure that this information is fed through to skills training and planning organisations, such as the Learning and Skills Council, to ensure funding and training is focused on areas of future need.

“Employers must continue to articulate that recruits need employability skills such as a strong work ethic, the ability to communicate and work with others, effective time management and that they are willing to learn.”

REC CEO Marcia Roberts added: “It’s interesting that this month’s report finds that temporary and contract staff pay rose at the sharpest rate for 27 months. This challenges recent TUC claims that employers are using temporary workers as a source of cheap and vulnerable labour.

“With demand for staff continually high, it’s vital that the job opportunities that temporary and contract work provide are not limited by unjustified regulation. Although last week’s proposed private members bill did not pass its second reading, it is important that the industry remains on the front foot to ensure that any European directive on agency work does not limit these opportunities.”