Quarter of employers expecting increase in hard-to-fill vacancies, CIPD warns

Firms are improving pay and taking steps to boost job quality in a bid to attract and retain talent, research finds

More than a quarter of employers are concerned the number of hard-to-fill vacancies will increase next year, the CIPD has warned, as firms continue to increase starting pay and job quality to attract talent.

The latest Labour Market Outlook from the CIPD found nearly half (47 per cent) of employers polled reported having vacancies that they were struggling to fill, up from 39 per cent the previous quarter.

Similarly, 27 per cent of the 1,000 employers polled said they expected the number of vacancies that were difficult to fill to increase over the next six months.

Construction, healthcare and public administration and defence were the sectors most affected by hard-to-fill vacancies.

At the same time, the research found that hiring intention is at its strongest since the start of the pandemic, with 71 per cent of firms saying they intended to recruit in the three months to December 2021.

The number of employers planning redundancies fell to 10 per cent, down from 13 per cent the previous quarter, which the CIPD said was further indication that the end of the furlough scheme earlier this year would not lead to high levels of unemployment.

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As a result, the research found firms were employing a number of tactics to address recruitment difficulties.

Nearly half (47 per cent) of firms polled said they had raised wages over the last six months to help offset hard-to-fill vacancies; 44 per cent were upskilling existing staff; 27 per cent were hiring more apprentices; and one in five (20 per cent) said they were taking steps to improve job quality.

It also found that more than four in five (84 per cent) employers were planning a pay review in the 12 months to September 2022, 39 per cent of whom expect basic pay to increase.

Just one in 10 firms (11 per cent) expected a pay freeze, and only 1 per cent expected a decrease.

Gerwyn Davies, senior labour market adviser at the CIPD, said that while many firms were anticipating increased recruitment difficulties, it was positive to see employers taking steps to improve how they recruit, retain and train staff.

But more government support was needed to help employers invest in skills and create better quality and more productive jobs, Davies said, calling for a change to the apprenticeships levy system.

“Reforming the apprenticeship levy into a broader, more flexible training levy would give employers the opportunity to use a wider range of qualifications that are more relevant for hard-to fill roles,” he said, citing HGV driver training as an example.

Davies also renewed calls for the changes to be made to the UK’s immigration system to help ease the pressure faced by employers. "The research findings strengthen the case for extending the existing Youth Mobility Scheme,” he said.

“This would prove a timely, cheap and effective ‘safety valve’ to help ease immediate labour shortages,” said Davies.