Employers are continuing to hire new staff despite uncertainty around Brexit. However, this confidence is yet to translate into significant salary increases for all but new starters and those with key skills.
The Chartered Institute of Personnel and Development (CIPD) and Adecco Group have released their latest Labour Market Outlook survey. It found that, despite rising recruitment and retention pressures, median basic pay expectations in the 12 months to March 2020 remain at two per cent. However, pay expectations have fallen back in the private sector from 2.5 per cent to two per cent and have risen in the public sector from one per cent to 1.5 per cent.
Inflation was found to be putting upward pressure on pay for some organisations, while recruitment and retention difficulties were also a key factor in driving pay decisions. More than half of employers said they had increased starting salaries for at least a minority of vacancies, while one in four have increased salaries for the majority of vacancies.
Hiring challenges have been a key issue for employers over the past year, with 33 per cent admitting that it is more difficult to retain staff, rising to 42 per cent of employers in the public sector.
“The majority of UK workers are long overdue a meaningful pay rise. However, many workers will remain disappointed with their pay packets until there are significant and sustained improvements to productivity,” said Gerwyn Davies, senior labour market adviser for the CIPD, the professional body for HR and people development.
The research also highlighted problems around skills shortages, particularly in professional occupations (eg scientists, engineers) where half of employers report that applicants don’t have the required level of skills needed.
In response to skills challenges employers are having to rethink their recruitment practices and draw from a wider talent pool. As a result: two in five employers are upskilling existing staff to offset hard to fill vacancies; 23 per cent are hiring more apprentices; 19 per cent are recruiting from outside the UK; and one in seven companies are lowering their recruitment standards.
“Organisations need to give much greater consideration to the obstacles that are preventing their people from performing better at work. A greater focus on training, development and better people management is needed to lift the UK out of its current productivity crisis,” said Davies. “One upside is that many employers are already investing in developing their existing workforce to plug skills gaps. Strengthening workplace training and recruiting in a more inclusive, flexible way will ultimately deliver higher performing and fairer workplaces.”
