Business leader warning despite increases in pay and jobs

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Jobs and pay are increasing, but business faces "serious threats" in the coming months which will impact on confidence and investment, according to a new report.

Research among 400 recruitment firms found that permanent staff placements reached a three month high in February, while job vacancies also increased.

The availability of staff for permanent and temporary jobs continued to fall, although easing to the slowest rate for two years.

Starting salaries for permanent workers increased at the fastest pace for three months in February - but pay growth eased for temps, said the Recruitment and Employment Confederation.

Chief executive Kevin Green said: "The UK labour market is at a critical juncture. Permanent hiring improved last month, demand for staff remains strong, and pay is going in the right direction, but serious threats are looming just around the corner.

"Next week the Chancellor will announce his plans for the coming financial year, at a time when recruiters across the country are reporting serious skills shortages alongside buoyant jobs growth. Now is not the time to put up additional hurdles that could throw the jobs-rich recovery off course.

"The introduction of the national living wage on April 1, closely followed by tax changes on April 6, will disrupt hiring strategies for many businesses.

"Employers will seek to offset rising wage bills, for example by scaling back recruitment and increasing automation. This could weaken future demand for staff.

"In June, the EU referendum carries a very real risk that business confidence will be curtailed and investment in hiring could falter."

Employment Minister Priti Patel said: "This country's jobs market is in excellent shape, with the employment rate at its highest ever level, a record 776,000 vacancies available across the country and pay continuing to rise.

"Next month the national living wage will give Britons a well-deserved pay rise, and by increasing childcare support, and creating three million more apprenticeships, our commitment to giving everyone a chance to benefit from our growing economy is plain for all to see."