UK employers are the most optimistic they have been in eight years about hiring, according to the quarterly Labour Market Outlook from the CIPD and Adecco.
The net employment intentions balance, which measures the difference between the proportion of employers expecting to add jobs and those planning to cut them, was positive across all sectors, it found.
It rose sharply to +27 for the second quarter of 2021, compared with +11 in the first quarter of the year. It was strongest in the private sector and the voluntary sector, at +28, while the public sector showed a positive intention of +22.
This is the highest level of optimism recorded in the LMO since February 2013, when this measure was first introduced.
The proportion of organisations planning to recruit in the three months to June 2021 jumped to 64% – the highest level since the February 2020 LMO.
Some of the worst affected sectors by the pandemic have reported strong hiring intentions. More than two-thirds (66%) of hospitality firms plan to recruit in the second quarter of 2021, up from 36% in the first quarter of 2021.
Employers are also more optimistic about pay, according to the CIPD and Adecco. Basic pay is expected to increase from 1% to 2% over the next 12 months overall, and in the private sector alone it rose from 1.5% to 2% in the second quarter compared with the first three months of this year.
Pay expectations in the public sector are not as high, however. Pay levels are only expected to rise by 0.9% over the next 12 months, and the CIPD has warned of the “re-emergence of a two-speed pay market between public and private sector workers”.
Gerwyn Davies, senior labour market adviser at the CIPD, said there was reason to feel positive about hiring intentions.
“More jobs and improved pay prospects should give us all reason to cheer, but a solid jobs recovery must be focused on better jobs, not just more jobs,” he said.
“To offset the emerging threat of recruitment difficulties, employers should be reviewing not just their recruitment practices, but also the quality of work they offer – such as employment conditions, the possibility of promotion, training opportunities and the right balance of flexibility and security. There’s more to good work than raising wages.”
The proportion of employers planning to make people redundant fell in the second quarter, too. Just over one in ten (12%) expect to cut jobs during the next three months, down from 20% in the previous quarter.
Davies added: “Despite the evident optimism in this quarter’s survey, it remains likely that such strong employment growth will soften during the course of 2021. This is due to the aftershocks of the pandemic, which will continue to be felt throughout the economy.
“It’s also inevitable that the surge in hiring activity caused by the easing of restrictions will level off. And, despite the welcome increase in basic pay expectations, it remains to be seen whether the pay award increases will be able to match any increases in the cost of living caused by the prospect of higher inflation; especially for public sector workers.”
Alex Fleming, regional president for northern Europe at Adecco, said it was crucial that employers did not become complacent.
“The net employment intentions balance across all sectors is at its highest level since winter 2013, but the disruption of Brexit, paired with the lingering threat of Covid-19, means that now more than ever, organisations must remain committed to levelling up and building back better,” he said.
“The need for up- and reskilling prospects and improved access to opportunity is only set to become more pertinent, particularly for those who are re-entering or looking to enter into the world of work for the first time.
“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.”