BLT's final survey of 2005 also reveals that business confidence amongst consultancies is strong for 2006, while salary increases remain modest.

BLT, which handles recruitment assignments for consultancies in the UK and northern Europe, says systems integrators Accenture, Atos, Capgemini and IBM hired in significant numbers – amongst them, BLT estimates they have recruited an additional 2500 experienced consultants and 4000 first time entrants during 2005. This is the highest number the recruitment firm has seen since 1999. In addition, other Top 20 firms such as PA Consulting and Deloitte report healthy growth in consultant numbers, and the new consultancy/advisory units being established at E&Y, KPMG and PwC are also competing for staff.

The strategy houses are a leading indicator of the health of the consultancy sector: they survey shows they are all hiring again in (comparatively) small but meaningful numbers. Other big operational consultancies have stopped pushing generalist consultants out the back door whilst welcoming sector-specific consultants though the front door. The many new small consultancies which have sprung up in the last two years, particularly in the Government space, tell BLT they are finding it hard to attract experienced consultants. There is considerable hiring activity in these houses.

The number of consultants looking for a new home diminished rapidly during the year, but the many MBAs who chose the right year to graduate from business school are now in with a good chance of entering consultancy. (For business school graduates, their attractiveness to consultancies depends on whether their pre-MBA work experience is relevant to consultancies’ needs, however.)

There are still particular shortages of good consultants in government. (BLT estimates that around 60% of vacancies are for public sector consultants.)

So what does this mean for salaries?

With inflation running at less than 3% and the demand/supply balance now in favour of employees, salaries have started to creep up, but modestly: after a short burst of improved rates of pay in the summer, the average settled to around 4% above 2004 levels.

Firms are reluctant to pay improved salaries to new hires: BLT has seen a number of consultants turning down offers from consultancies because salaries are barely above current earnings. This is frustrating for consultants wishing to move, and foolish for consultancies with hiring needs.

The retention packages for experienced consultants reported by the large firms seem to be becoming more imaginative however: these include a widening of salary grades with a greater overlap between grades, a higher incidence of and improvement in discretionary bonuses, and a round of promotions.

At the other end of the scale, graduates are still being recruited in substantial numbers and salaries are attractive enough to compete with all but the best City packages.

The main message from the salary survey is that consulting firms of all sizes are now under real pressure to increase pay. Those that continue to emphasise the improvements in some of the 'softer', non-cash areas: more home working or improved holiday allowances, for example will find that these don’t compensate for cash in pocket.

Salary structures and benefits

Below BLT lists grades and salary mid-points. The figures are drawn from employed consultants (no self-employed consultants are surveyed) who work in firms of all sizes, sectors and functional areas. The only common thread is that they work in or around London. Salaries i