UK employers’ near-term employment expectations have risen to a five-year high, according to the latest quarterly Labour Market Outlook report from the CIPD (Chartered Institute for Personnel and Development) and Adecco.

The report, which surveyed more than 1,000 employers, also cautions that the continued growth in demand for labour is set to lead to a further tightening of the UK labour market for employers, making it more difficult for them to find necessary skills and labour.

During the past three months, the net employment balance, which is 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.

Meanwhile, the report showed that median basic pay award expectations in the 12 months to March 2019 are 2%, but average (mean) basic pay expectations have risen from 1.8% to 2.1% over the last quarter.

Gerwyn Davies, senior labour market analyst for the CIPD, commented, “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.”

Davies added that organisations must ramp up their efforts “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.”

The survey data also showed that 61% said that at least some of their vacancies are proving hard to fill. This is higher than last year’s 56% of employers who reported they were having difficulty filling vacancies in their organisation.

This year, 28% of employers said that they are raising wages to tackle their recruitment difficulties and 38% said they are planning on upskilling current employees to offset hard-to-fill vacancies.

Alex Fleming, Country Head of UK and Ireland and President of Staffing and Solutions, The Adecco Group UK and Ireland, commented, “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.”