According to an annual salary survey by specialist banking and financial services recruitment firm Morgan McKinley, financial services workers are gaining significant increases in basic pay when moving roles because of a shortage of qualified staff.

Morgan McKinley says this is particularly the case for senior accountants across the controlling functions within investment banks. A fall in the number of graduates taken on by accountancy firms in 2002 and 2003 is continuing to have a knock-on effect on the availability of staff and as a result experienced accountants are receiving on average a 31% rise in basic salary.

The survey shows that junior staff are also receiving higher basic salaries compared to 2005. For example fund managers within asset management houses with up to two years' experience who could have expected a minimum basic salary of £30,000 in 2005 but are now commanding a minimum of £38,000 – a jump of 27%.

Junior back office support staff have also seen a significant increase in demand and salaries. For example, an OTC derivatives credit documentation specialist with up to two years' experience can now earn between £35,000 and £45,000 - an increase of 14% on last year.

Furthermore the secretarial and office support sector - which hasn't seen salary growth for several years - is also showing signs of upward movement in basic pay, particularly for those with specialist skills and knowledge. Desk assistants and trading floor secretaries with up to two years' experience can now earn between £25,000 and £29,000 as opposed to £20,000 to £24,000 in 2005.

Robert Thesiger, chief executive of Morgan McKinley says across the board salaries have been going up over the last year as the 'war for talent' continues to take hold in the City. Headcount targets in nearly all investment banks have risen in order to handle increased business activity and supply has not been able to keep up with demand.

"With the financial services industry looking set to remain buoyant well into 2007 and beyond, employers are now working hard to secure the talent they need. Already, total compensation packages have become more sophisticated in the battle to retain staff and in order to attract new talent, banks are upping starting salaries, offering sign-on bonuses and in some cases providing indications of what 2007 bonus payments may look like," he adds.

Thesiger adds that as well as using compensation packages to lure individuals from competitors, banks are becoming more flexible in hiring and opening up candidate specifications to attract those who may not necessarily be an exact fit for a role but can demonstrate potential.