Salaries – Wages inflated by few recruits

A shortage of newly qualified accountants has triggered big pay rises, as accountancy firms scramble to attract recruits, according to a new report.

In a survey of 70 accountancy practices in the UK, conducted by Reed Accountancy Personnel, 47% said they had experienced problems finding suitably qualified staff. In the City, the figure soared to 63%.

Audit and tax specialists were also in short supply, with 39% of firms struggling to recruit audit specialists and 44% having difficulty recruiting tax specialists.

The report suggests a skills shortage is responsible for a 4.7% rise in the average starting salary for newly qualifieds over the last year.

The average salary rise for London was 5.5% – almost twice the rate of inflation. Reed predicted wages would continue to climb over the next year by 4.6%.

Sandy Boyle, national human resources partner for Group A firm Kidsons Impey, said mid-tier firms had felt the squeeze. ‘We’re in a fiercely competitive hunting ground for newly qualifieds,’ he said. ‘There’s a shortage because not enough people were trained four years ago.’

But human resources partner Andrea Grimshaw at Horwath Clark Whitehill, rejected the idea of a skills shortage: ‘Reed’s figures for finding suitably qualified staff don’t match our experience in London.’

She said the report overlooked the root cause of rising salaries: ‘Professional practices are under pressure from the City. It pays higher salaries to get newly qualifieds for the commercial market.’

The outlook for small practices is as turbulent, according to Phil Shohet, managing director of Kato Communications, a management consultant for accountancy and law practices. ‘A lack of good people would be traumatic for smaller firms. They’re no longer breeding new partners from within. Their tier of management has almost disappeared,’ he said.

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