Despite mass layoffs in the UK’s tech sector, IT skills shortages remain rife, with employers having to use higher-than-average pay inflation to fill resourcing gaps, according to the latest Robert Half Jobs Confidence Index (JCI) in association with the Centre for Economics and Business Research (Cebr).

The report shows that, while vacancies have dropped in light of redundancies across the sector, there are still on average 52,000 unfilled IT jobs, suggesting that skills shortages remain a significant challenge for tech firms. Despite this, the sector has shown signs of resilience, with annual labour productivity growth increasing 3.6% quarter-on-quarter.

According to the Index, average weekly earnings in the IT sector are up 8% year-on-year, currently standing at £1,146 per week. This marks the largest growth across the sectors, with average IT salaries 80% higher than all other industries. While this uptick will have been influenced by the cost-of-living crisis, the fact that this spike is significantly higher than other sectors suggests pay inflation is largely being driven by continued skills shortages.

The data further indicated that the layoffs noted since the end of 2022 have led to many professionals moving into contract roles, with the share of employees with a temporary work arrangement in IT up 0.2% quarter-on-quarter.

Kris Harris, Regional Director at Robert Half, said, “It’s clear that despite the layoffs and general uncertainty that we’ve seen in the tech sector, demand for IT specialists is still outstripping supply. While firms are using financial incentives to source the skills they need – largely driven by the demand of candidates themselves – this isn’t a sustainable solution in what remains are tight economic landscape.”

“The skills gap in IT has been prevalent for a number of years now, but as tech innovation continues at pace, now really is the time to take action before it’s too late for some businesses that will ultimately lose their competitive standing without the right talent,” Harris said. “Diverse hiring will certainly play a critical role and initiatives need to be implemented quickly if this resourcing gap is to be closed.”