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, while 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.”
Meanwhile, more graduate vacancies are expected to be available this year, but university leavers still need to ensure they have the right skills and abilities to land a job, a new survey suggests.
There is expected to be a 10.2% rise in openings in the coming graduate recruitment round, according to a poll of leading graduate employers by the Association of Graduate Recruiters.
It predicts that a number of industries will have more vacancies available, with job openings in IT and telecoms expected to rise by 40%.
The public sector is also predicted to have a large increase in vacancies - up 20% on last year, along with energy, water and utilities (up 17.5%) and banking and financial services up 15.7%.