The monthly Recruitment and Employment Confederation (REC)/KPMG Report on Jobs says there were record overall starting salaries recorded in June, with engineering and IT facing particularly bad skills shortages.

The overall shortage in staff and skills rose to its sharpest level in the survey's history, which began in October 1997.

Amid reports of a short supply of suitable candidates, and with demand for staff increasing, permanent salaries rose during June at a survey record rate. Salaries have now risen for 26 months in succession.

IT skills and jobs in strong demand recorded by the survey included CAD designers, e-commerce, .Net, JAVA, SQL, web developers and IT developers.

REC director of policy Tom Hadley said: "Last month saw the number of workers available to fill vacancies plummet to an all-time low, in particular across business development and sales roles that are vital to boosting bottom lines. There are also persistent shortages across IT and engineering, which are becoming a serious threat to economic growth."

He said: "The message to UK businesses is that it is crucial to sharpen up hiring procedures in an increasingly candidate driven market. The message to government is that we need to reform the visa system to satisfy immediate demands for skills, whilst stepping up measures to boost the UK skills base for the long-term."

Bernard Brown, partner and head of business services at KPMG, said: "Once again employers seem ready to 'splash the cash' in what appears to be a desperate attempt to lure skilled staff from competitors. Yet despite offering starting salaries at a rate that has not been seen during the survey's 17 year lifetime, it is clear that candidates are not easily swayed."

Brown said: "Perhaps this means that the productivity gap is being replaced with another chasm - a vacancy vacuum - and one that is unlikely to be resolved until employers recognise that, for staff, remuneration is about much more than take home pay."