BUSINESS NEWS - UK - Hiring Boom Set To Continue But Labour Market Expected To Reach Its Peak Soon
The UK’s hiring boom is set to continue into the next quarter as private sector pay awards reach new highs, according to the latest Labour Market Outlook report from the Chartered Institute of Personnel and Development.
The report, based on a survey of 2,000 senior HR decision makers, added that with high inflation eroding pay packets and a recession forecast for the end of 2022, the labour market could soon reach its peak.
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 warned 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 labour market data from the Office for National Statistics showed that the growth in employees' average total pay (including bonuses) was 5.1% and growth in regular pay (excluding bonuses) was 4.7% in April to June 2022. In real terms (adjusted for inflation), over the year, total pay fell by 2.5% and regular pay fell by a record 3.0%.
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.”
CIPD’s research also indicated that hiring intentions remained strong with 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 13% of employers expecting to make redundancies in the next three months.
Meanwhile, 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%).
“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,” Boys said.
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