Forces within the legal job market - including increased hiring intentions, skills shortages and a widening gap between employee and employer salary expectations - are combining to create a "perfect storm" of salary pressure in 2011.
According to the 2011 Hays Salary Guide, the legal sector is yet to see significant salary increases despite positive hiring intentions and a shrinking talent pool.
"The employment market over the past 12 months was dominated by low unemployment and increased job vacancies," said Hays legal director Darren Buchanan. "At the same time, candidate confidence has continued to grow and skills shortages are now emerging."
According to Buchanan, 74 per cent of organisations expect business activity to increase over the next 12 months, 45 per cent of employers expect to increase permanent head-count over the coming year and staff turnover has already increased in 31 per cent of organisations.
Despite these developments, Buchanan notes that employers have not yet offered widespread, significant salary increases. "Certainly salaries have been increasing gradually over the past year and we expect this trend to continue as firms strive to compete and retain quality candidates," he said.
According to Buchanan, in the coming year high performers will be looked after either by receiving a salary at the top end of their band or through bonuses.
However, the survey revealed that only six per cent of employers will offer increases above six per cent, while 43 per cent intend to increase salaries by less than three per cent.
"Such low intentions are at odds with candidate expectations - particularly those of candidates in demand - and so we expect the gap between salary expectations to widen and salary pressure to grow."