Employers will be pressed to increase pay this year amid a rise in vacancies, coupled with skills shortages, according to a new report.
Employment firm Reed said vacancies on its website have increased by almost a third over the past year to stand at over 160,000.
Wage rates have remained "largely stagnant" and have fallen in some regions, but Reed said this was likely to change.
Chairman James Reed said: "While employers have gone out of their way to hold on to valued staff during the downturn, the improving economic situation is creating a new set of pressures on pay.
"A wider choice of opportunities is giving candidates a renewed confidence, whilst skills shortages are becoming ever more apparent in key industries, such as engineering.
"These factors are combining to give employees the upper hand when it comes to negotiating salaries and adding pressure on employers to increase their rates of pay.
"It will be the employers who are fastest off the starting blocks who will win the new race for talent."