The UK’s hiring boom is set to continue into the next quarter as private sector pay awards reach new highs. For now, the labour market remains incredibly tight and candidates are hard to come by. Employers are pulling out all the stops to attract, and crucially, retain staff. However, with high inflation eroding pay packets and a recession forecast for the end of 2022, the labour market could soon reach its peak. according to the CIPD’s latest Labour Market Outlook report.
Pay award expectations have hit a record high in the private sector, rising to a median of 4%, the highest of any sector in the Labour Market Outlook’s current time series, which began in 2012. The median expected basic pay increase across all sectors continues at 3%.
However, the CIPD, the professional body for HR and people development is warning that pay increases cannot be sustained over the long-term so employers should look at other ways of supporting financial wellbeing in the cost-of-living crisis, such as enhancing their overall benefits package.
The latest instalment of the CIPD’s forward-looking quarterly economic indicator found that many employers were still grappling with recruitment and retention challenges when surveyed in late June/early July.
The survey of 2,000 senior HR decision makers indicated that hiring intentions remained strong, with seven in ten employers (72%) expecting to recruit in the next three months. This figure was even higher in the public sector (84%). It also found that redundancy intentions continue to sit below pre-pandemic levels, with just 13% of employers expecting to make redundancies in the next three months.
Almost half (47%) of employers have hard-to-fill vacancies, and these are most strongly felt in education (56%), transport and storage (55%), and the voluntary sector (53%). In response to ongoing recruitment and retention challenges, among employers with hard to fill vacancies, the top response has been to upskill more existing staff (41%) followed by advertising more jobs as flexible (35%) and by raising wages (29%).
Jonathan Boys, labour market economist for the CIPD said:
“We’re seeing some of the highest pay awards in recent history as employers strive to attract and retain staff. However, strong pay growth can’t last forever. To deal with the cost-of-living crisis, employers will have to look at other ways they can support their people. Employer benefits that help reduce the cost of housing, travel and childcare will be of particular value to those on the lowest incomes.
“Forecasts of a recession may dampen employers’ recruitment plans in time, but for now, the UK is still in the grips of a hiring boom, with nearly three in four employers planning to take on more staff. In addition to hiring new staff, employers are also taking numerous measures to keep their existing people by upskilling staff, increasing wages and improving job quality.
“Now is a good time for the Government to capitalise on employer appetite for upskilling. It’s vital employers have the right support mechanisms in place to access the training they need. Reform of the apprenticeship levy could help by enabling organisations to spend the levy on training that best suits their business’s needs at this crucial time.”