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UK – CIPD Labour Market Outlook shows optimism

12 August 2013

Employers report for the sixth consecutive quarter that they expect jobs growth, with more openings for job seekers but increased competition between employers for the right candidates, according to the CIPD 2013 Success Factors Labour Market Outlook (LMO).

The report shows that the net employment balance, which measures the difference between the proportion of employers expecting to increase staffing levels and the proportion intending to reduce staffing levels, stands at +14.  This is an increase from +9 in the previous quarter and the highest figure since the recession in 2008. The LMO has previously shown itself to be a reliable indicator of the official employment statistics quarter on quarter and the latest results suggest a degree of optimism noted in other economic indicators, most notably Q2 GDP.

Private sector employers remain positive about employment intentions with an increase in the net employment balance; from +21 in Spring 2013 to +26 in the Summer 2013 survey.  In contrast, public sector employers remain more likely to expect overall job cuts but reported an improvement in the net employment balance (-25 in Summer 2013 compared to -31 in Spring 2013).

Employers do not expect wage growth to accelerate significantly.  Among those LMO employers planning a pay review in the twelve months to February 2014, the average anticipated settlement for basic pay, excluding bonuses, was +1.7%, unchanged from the previous quarter.   

Mark Beatson, CIPD chief economist, comments: "These results suggest we should see further jobs growth over the summer and autumn and hopefully reflect a degree of optimism about growth prospects for 2013.  This is welcome news for job seekers. The challenge for the increasing proportion of employers looking to hire will lie in finding the right talent to fill their vacancies.  The annual CIPD/Hays Resourcing and Talent Planning survey suggests that turnover still remains low, perhaps because many employees are reluctant to leave the security of their current role for fear that the market dips again, so employers could find fewer ideal candidates around than they might have expected.  To counteract this possibility, employers will need to be flexible and innovative in their approach to recruiting and retaining employees, and make sure their job offers are attractive to the more confident and active job seekers entering the market. If competition for talent remains high, as our annual survey suggests, employers will also need to think more than ever about ways in which they can grow their own workforces by recruiting for potential and investing in the development of existing employees.”

"However, there is still little sign of improved confidence about employment prospects feeding through into pay expectations, which remain below the rate of inflation.  Clearly employers feel they do not need to raise pay to meet recruitment goals and, with turnover low, retention is unlikely to be a pressing issue for most organisations.  However, both these factors could turn as the job market improves and employers need to be prepared to adjust their workforce planning, development and reward practices in response," he added.

Also commenting, James Reid, UK and Ireland Managing Director, SuccessFactors, said:  "Today's highly competitive economy has left businesses not only battling for custom and market share, but also for the acquisition and retention of talent. But an important balancing act must take place when it comes to employing new talent versus the training and development of the existing workforce. Businesses should not focus solely on new talent if they are to keep recruitment costs down and retain the best staff. Positively this has not been lost on business leaders. At SuccessFactors we are seeing a growing interest and investment in employee development and up-skilling across all staff levels outside of traditional HR spend, from e-learning to better on-boarding and performance management." 

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