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UK – Employers lack workforce capacity to respond to growing demand

22 January 2014

A growing proportion of businesses have no capacity to take on more work without creating new jobs. However, shortages of suitable candidates in some skill areas could hinder growth. These are two key findings from the report ‘JobsOutlook: The UK’s post-recession labour market’, published today by the Recruitment and Employment Confederation (REC).

Analysis of employers’ responses to the monthly survey throughout 2013 found that:

  • 31% say they have no spare capacity and would have to hire new staff if work increased
  • A further 54% have only “a little capacity” and “might take on staff if demand grew this year”
  • 21% report having increased their headcount within the year (up from only 4% in 2009)
  • 12% record having made redundancies in the past year (down from 22% in 2009)

When asked when they expect to see conditions improve for their organisation:

  • Almost half (49%) say “things are ok now, no improvement needed”
  • A further quarter (26%) agree with the statement “things are starting to pick up now”

Technical and engineering, computing and IT, and education and training are the areas in which employers expect to have the most difficultly sourcing appropriately skilled candidates for permanent roles. Technical and engineering is also the area of greatest concern for employers thinking about temporary roles; followed by driving and distribution, and professional and managerial.

Commenting, REC head of policy Kate Shoesmith said: “Employers’ inability to improve their workforce productivity without hiring new staff is likely to supress pay growth in the foreseeable future as they invest in increasing headcount rather than pay packets. Starting salaries and hourly pay rates will rise in certain areas where skilled candidates are scarce and companies have to compete for talent.”

“The shortage of candidates with the skills required for a growing number of vacancies is a looming problem. Politicians and business leaders need to work together to find solutions to the mismatch between what employers need and what jobseekers have to offer.”

“Training for young people, world class careers advice and a supportive immigration policy are three areas where immediate action is needed to ensure UK businesses can compete in the world economy,” she concluded.

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