UK labour market buoyed by rising global demand

The latest 'Labour Market Outlook' from the CIPD and The Adecco Group suggests employers' near-term hiring intentions are at a five-year high, with pressure on wages also rising.

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The professional body for HR and people development’s quarterly survey of more than 1,000 employers predicts strong growth in the demand for labour in the second quarter of 2018. During the past three months the net employment balance – a measure of the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff levels in Q2 2018 – increased from +16 to +26.The CIPD believes recent announcements around the UK’s existing trading arrangements, with freedom of movement continuing during the Brexit transition period from March 2019 to December 2020, could have reassured employers. This, together with the recent strength of the global economy and the depreciation of sterling, which are boosting sectors such as manufacturing and business services, are weighing positively on labour market sentiment. 

Reasons to be cheerful about UK GDP growth?

Gerwyn Davies, senior labour market analyst for the CIPD, the professional body for HR and people development, comments: “Employer optimism about job prospects remains extremely positive, which suggests we should be cautious about putting too pessimistic an interpretation on the weak provisional GDP figures released last month.“However, employers looking to expand their workforces are likely to face growing headwinds as organisations find it more difficult to source the people and skills they need. This may explain why wage pressures are starting to increase following a prolonged period of relatively subdued pay growth. It could well be that employers are using higher starting salaries to attract the talent they need”The Labour Market Outlook further observes tentative signs wage pressure may already be increasing for employers. Median basic pay award expectations for the next 12 months remain unchanged at 2%, but average (mean) basic pay expectations have risen from 1.8% to 2.1% over the last quarter.
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How are employers responding to growing labour demand?

As well as labour demand being at a five-year high, the number of employers reporting difficulties filling vacancies in their organisation was 56%. Almost two-thirds (61%) of employers also said that at least some of their vacancies are proving hard to fill. In response, more than a quarter (28%) said that they are raising wages to tackle their recruitment difficulties.“Employers need to think more creatively about their workforce planning and talent pipelines to ensure that they can continue to access and develop key skills,” continued Mr Davies. “There needs to be a mix of attracting new and diverse talent as well as upskilling existing staff. “In particular, organisations must put much more effort into attracting and retaining older workers, women returning to work after having children and other disadvantaged groups in the labour market, as well as investing in training and developing their existing workers.”

Finding creative solutions to talent attraction, development and retention

Alex Fleming, country head of UK and Ireland and president of staffing and solutions, The Adecco Group UK and Ireland, added: “It is positive to see signs of wage growth after a prolonged period of stagnation. However it is vital that employers leverage the full breadth of their employment package in the search for new talent.“In our constantly evolving labour market where competition for talent is increasingly fierce, many employees are now looking for much more than just a strong wage packet. Employers have more than one weapon in their arsenal; elements such as flexible working, modern workspaces, collaborative office spaces and inspiring management are all attractive to different segments of the labour market.“It is time for employers to recognise talent as individuals and tailor employment packages accordingly to avoid missing out on key skills which will drive innovation and success.”  For related news and features, visit our Human Resources section. Visit our Relocate Awards section to find out who won and about the gala awards dinner. Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory