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LONDON (Reuters) - British employers are raising the salaries they offer to new permanent staff at the fastest rate in nearly seven years as they struggle to fill vacancies, a survey showed on Tuesday.
The figures from the Recruitment and Employment Confederation suggest Britain's strong economic recovery last year is finally translating into higher pay. However, they also raise questions about whether domestic inflation might soon start to rise above the Bank of England's 2 percent target.
The REC said its monthly survey showed that average salaries for permanent staff were up by the biggest amount since July 2007, though wage growth for temporary staff slowed slightly.
"Starting salaries and hourly pay rates are up as employers battle to entice the talent they need," REC policy director Tom Hadley said.
"Worsening candidate shortages mean that the number of people available to fill both temporary and permanent jobs is falling at the sharpest rate in nearly a decade," he added.
The REC said the strongest demand for staff was in engineering, construction and information technology, and urged the government to relax visa restrictions on highly skilled immigrants and improve training for the long-term unemployed.
The rate of hiring of permanent staff slowed slightly from a four-year high recorded in March.
The Bank of England has forecast that wages will start to grow faster than inflation this year for the first extended period since the 2008 financial crisis, but sees little risk that inflation of 1.7 percent in February will rise much above target.
Unemployment has fallen steeply over the past six months to 7.2 percent, but official wage data does not yet show strong earnings growth which might feed through into higher prices. Average weekly earnings in the three months to January were up just 1.4 percent on the year.
Reporting by David Milliken; Editing by Susan Fenton