UK sees 'strong employment intentions' amid hard-to-fill vacancies

Median base pay rise expectation among employers hits record high

UK sees 'strong employment intentions' amid hard-to-fill vacancies

Employers across the United Kingdom are planning to increase staff levels in the next three months, indicating "strong employment intentions" amid hard-to-fill vacancies.

The UK's net employment balance — or the difference between employers increasing and decreasing staff levels — remained at +28 in the Chartered Institute of Personnel Development's (CIPD)’s latest Labour Market Outlook.

"This continues to exceed pre-pandemic levels, pointing to strong employment intentions," the report said.

The findings come as 57% of the report's 2,012 respondents said they currently have hard-to-fill vacancies, with 29% anticipating significant problems in filling them over the next six months.

"Our analysis shows skill shortage vacancies outnumber labour shortages, and those with degree-level or equivalent qualifications are highest in demand," said James Cockett, CIPD labour market economist, in the report.

Measures taken by employers

To address the problem, employers said they are responding with the following measures:

  • Upskill more staff (47%)
  • Raise wages (43%)
  • Increase duties of existing staff (36%)
  • Improve job quality (27%)
  • Hire more apprentices ((26%)
  • Hire more UK graduates (19%)
  • Introduce or increase automation (16%)
  • Hire more non-EU nationals (14%)
  • Hire parent returners (14%)
  • Make greater effort to recruit older workers (14%)

"It's positive to see many employers taking steps to tackle skills shortages by upskilling existing staff and hiring apprentices," said Jon Boys, senior labour market economist for the CIPD, in a statement.

"However, the UK government could provide much-needed support by making the Apprenticeship Levy more flexible, to boost employer investment in training and reverse the decline in apprenticeship starts we've seen in recent years."

According to Boys, it also necessary for employers to focus on improving job quality, particularly on flexibility, if they want to attract certain groups, such as older workers, carers, and those with health conditions.

The United Kingdom, which recently piloted a large four-day work week trial, introduced new legislation that seeks to grant employees the right to request flexible working arrangements on their first day at work.

"The forthcoming introduction of a day one right to request flexible working should prompt more employers to ensure that they advertise jobs as flexible and provide a range of flexible working practices to attract and retain a more diverse workforce," Boys said. "However more needs to be done to help provide employers, particularly SMEs, with access to occupational health services or support, to help them to keep our ageing workforce healthy and in work."

Pay rise expectations

Among the employers planning to increase wages, 57% said they also plan to raise prices instead of lowering profits and absorbing costs (47%), according to the report.

The median base pay rise expectation among employers has hit five per cent — a new record high for CIPD's quarterly employment barometer since launching in 2012.

For the public sector, however, the anticipated pay rise expectations lag, at only two per cent.

It comes as many public sector employees walked out of their jobs to push for higher pay amid a cost-of-living crisis. The latest findings from the Office for National Statistics (ONS) revealed that nearly 2.5 million working days were lost to industrial action in 2022, Reuters reported.

UK's inflation rate recently hit its highest in four decades in October with 11.1%, before declining to 10.5% in December, according to data from the ONS.

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