Employer confidence highest since 2012, says CIPD

Two thirds of employers are planning to recruit and many plan to upskill staff in a bid to tackle labour shortages, according to the latest Labour Market Outlook from the CIPD.

The HR body’s quarterly survey of more than 2,000 employers found strong employment intentions for the third quarter of 2021, with confidence surpassing pre-pandemic levels to hit a nine-year high.

The UK survey found that net employment intentions, which gauges the proportion of employers expecting to recruit versus those planning job cuts, have risen for the fourth consecutive quarter. The figure now sits at +32, up from +27 in the previous quarter, marking the strongest employer intentions seen since tracking began in winter 2012/13.

More than two-thirds (69%) of employers planned to recruit in the three months to September 2021, up from 64% last quarter and 49% this time last year.

Just 26% of hospitality, arts and entertainment employers were looking to hire last summer, increasing to 72% this summer. In transport and storage, another sector significantly affected by the pandemic and post-Brexit immigration changes, the proportion increased from 33% to 65%.

Jonathan Boys, the CIPD’s labour market economist, said: “This is an incredibly strong set of data and paints a very different picture to employer intentions a year ago. Employers are very optimistic, indicating strong recruitment intentions and redundancy expectations appear much lower than originally predicted during the pandemic.

“Over the last year, employers have been able to flex the workforce to meet demand by using the furlough scheme to rapidly expand and contract staffing levels at minimal cost. This will no longer be a viable strategy as the scheme winds down, so we’ll see recruitment and retention pick up the slack as employers look to plug any gaps in their workforce.”

When asked how employers with hard-to-fill vacancies will deal with these vacancies, 44% said they would upskill existing staff, 26% said they would hire more apprentices, and 23% said they would raise wages.

Boys added: “With difficulty finding labour in some sectors, employers will need to think more long-term about how they meet skills needs. It’s important for organisations to look carefully at their recruitment and retention strategies and consider where they need to develop these, for example by increasing investment in training and reskilling. Retention strategies should be built with boosting job quality in mind, as employers have a huge role to play in improving working lives.”

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The proportion of employers looking to make redundancies has settled at around 13%, compared to 33% in summer 2020. Over four-fifths (81%) of employers are planning a pay review in the 12 months to June 2022. Among these employers, 33% expect a pay increase, 12% envisage a pay freeze and 1% anticipate a pay decrease, while 37% said it was hard to tell and will depend on organisational performance.

Median basic pay settlements remain at 2%, the same as last quarter, but higher than the 1% rise predicted for four consecutive quarters in 2020.