Employers are the most optimistic about jobs they have been in the last eight years, a survey has found, although experts have warned of future labour shortages as the UK economy begins to recover.
The latest Labour Market Outlook from the CIPD and Adecco, which polled more than 1,000 UK employers, found the proportion of organisations that plan to recruit in the three months to June 2021 has increased to 64 per cent: the highest level since February 2020, before the first coronavirus restrictions were introduced.
The proportion of employers planning to make redundancies also continued to fall. Just 12 per cent planned to make cuts over the next three months, down from 20 per cent last quarter.
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The CIPD’s net employment intentions balance – which subtracts the percentage of employees planning to downsize their workforce from the percentage planning to increase their workforce – also increased to +27 from the second quarter of 2021, up from +11 in the first quarter and -1 in the last quarter of 2020. This is higher than at any time since winter 2012-13, the report said.
Employer optimism was noticeable across all the public, private and voluntary sectors (+28, +22 and +28 respectively), while some of the worst-affected sectors during the pandemic have shown a sharp increase in hiring intentions.
Around two-thirds (66 per cent) of hospitality businesses plan to recruit during the second quarter of 2021 – almost double the number of firms in the first quarter (36 per cent).
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However, Gerwyn Davies, senior labour market adviser at the CIPD, warned that while positive hiring intention was “reason to cheer”, this rush was likely to level off.
Davies also cautioned that employers could see labour shortages as the economy picked up, and urged employers to focus on “better jobs, not just more jobs”.
“By offering better-quality jobs, employers will be in a better position to attract and retain the staff they need, particularly in sectors that have traditionally relied on EU workers, the supply of which has fallen sharply,” he said.
“New limits to the supply of unskilled migrant labour and the switch to new ways of working presents many employers with an incentive to review job quality. Now is the optimal time for the HR profession to raise its voice on this issue – both to ease recruitment difficulties and raise productivity.”
Given the disruption caused by Brexit and the lingering threat of coronavirus, Alex Fleming, region president of northern Europe at Adecco, said businesses needed to “remain committed to levelling up and building back better”.
“The need for up/reskilling prospects and improved access to opportunity is only set to become more pertinent”, he said. “Therefore, future business strategies must be built on the foundations of social mobility and inclusion, which will not only help to strengthen talent attraction and retention levels but also ensure companies remain resilient in the critical months ahead.”
A report from the Economic Statistics Centre of Excellence in January showed there had been an “unprecedented exodus” of non-UK born residents from the UK over the last year, with the number of non-UK born resident workers falling by more than half a million during this time period.
Similarly, official figures from the Department for Work and Pensions showed the number of national insurance number registrations to EU nationals decreased by 99 per cent between July and September 2020 compared with the same period in 2019.
The Labour Market Outlook report also found that there had been improvement in pay prospects, with basic pay reward expectations due to increase from 1 per cent to 2 per cent over the next 12 months.
However, the report warned about the possible reemergence of a two-speed pay market between private and public sector workers. While private sector median basic pay expectations increased from 1.5 per cent to 2 per cent in the last quarter, in the public sector it was just 0.9 per cent, up from 0 per cent the previous quarter.
Davies also cautioned that, despite the welcome increase in basic pay expectations, it remained to be seen whether pay would keep up with the prospects of higher inflation.