The country's largest recruitment company by revenue is seizing on a shortage of skilled architects and construction engineers to fill gaps exposed by a recovering housing market, as the UK economy grows at its quickest in more than six years.

"There is a real skill shortage in design, in infrastructure, in architecture," Hays Chief Financial Officer Paul Venables said. "There's simply not enough people around."

British employers are planning to hire at the fastest rate since the early days of the financial crisis, a recent survey by the Chartered Institute of Personnel and Development revealed.

A familiar pattern has emerged: employers spent less on training temporary staff during the financial crisis, resulting in a dearth of qualified candidates now that vacancies are opening up.

The shortage also allows employees to be more discerning when it comes to salaries — good news for recruitment companies' profit margins, as more people are willing to switch jobs and employers pay fatter commissions.

With Britain's broad-based economic recovery creating demand for skilled professionals, the shortage of qualified workers could last from three to five years, according to estimates from Hays and competitor Robert Walters Plc.

Some analysts argue, however, that higher salaries and better jobs will also lure back qualified personnel who were forced into temporary employment during the downturn. In other words, they say fears of a skills shortage are overblown.

For now, Hays' greater focus on building and property has given it an edge over competitors. Construction, which accounts for just over 6 percent of the British economy, grew for the 13th consecutive month in May.

The company, which has a market capitalisation of 2.2 billion pounds, says the last six months has delivered the sharpest pickup in permanent hiring for 20 years.

Of 21 analysts covering Hays, 14 have a "buy" or "strong buy" rating on a stock that has gained 72 percent in the last 12 months. Hays trades at 19.6 times forward earnings, higher than the median of 17.5 times for seven selected recruiters, Thomson Reuters data shows.

But as employers seek more lawyers, accountants and IT professionals, bigger gains could be saved for those recruitment companies with an emphasis on permanent hiring — unlike Hays, which typically generates more than half of its net fees from temporary jobs.

Hans Pluijgers of brokerage Kepler Cheuvreux is one of seven analysts with a "hold" rating on Hays' stock. But he has a "buy" rating on Michael Page International, a competitor whose stock has gained 22 percent in the past 12 months.

"I see high operational leverage potential for Michael Page, due to the fact they're more focused on permanent placements," Pluijgers said.

Michael Page should be trading at 485.34 pence, according to Thomson Reuters StarMine's intrinsic valuation model, which takes analysts' five-year estimates and maps the growth trajectory over a longer period.

The stock closed on Thursday at 463.6 pence.

'RIDE THE WAVE'

Robert Walters, the veteran chief executive of the company that bears his name, said he believed that an increase in profit margins for the industry was just beginning to gather pace.

"I expect we'll see it over the next year for sure," he said, forecasting that margins at the company would improve by 3 to 5 percentage points this year.

Total pay growth in the UK, including bonuses, caught up with inflation this year for the first time since 2010, data from the Office for National Statistics shows.

An increase in permanent salaries in Britain accelerated in April to reach its highest level since July 2007, with engineers the most sought-after professionals, a report released in May by the Recruitment & Employment Confederation and KPMG showed.

Andy Smith, analyst at brokerage Charles Stanley Securities, said recruitment companies would "ride the wave" of rising salaries by deriving higher net fee incomes for placing people in permanent jobs.

Some analysts caution that the shortage might blow over. Hector Forsythe, head of research at Oriel Securities, said the promise of higher salaries would drive people in low-paid temporary work back to their areas of specialisation.

"A lot of people have gone out of the construction sector, for instance, in the downturn," he said. "Some of those will be lured back in by higher salaries. They haven't evaporated."

Banking, often one of the first sectors to stir after a financial crisis, has been much slower to recover this time around, due in part to prolonged hiring freezes at several big investment banks.

But even this is beginning to change: the latest monthly report by the Recruitment & Employment Confederation and KPMG, released on Friday, said that accounting and financial professionals had overtaken engineers in May as the most coveted employees.

"There are still a number of investment banks with hiring freezes, so it's not translated yet," said David O'Brien, analyst at brokerage Shore Capital.

(Editing by Robin Paxton)

By Esha Vaish and Li-mei Hoang