One in five HR professionals expect significant problems with filling vacancies in the first half of 2024, the CIPD has found.
The HR body’s latest quarterly labour market outlook, based on a survey of more than 2,000 senior HR professionals, suggests that difficulties with candidate attraction and recruitment persist, with fewer employers expecting to increase the size of their workforces than in previous quarters.
Thirty-eight per cent still had hard-to-fill vacancies in their organisation and 21% expect significant challenges in filling their roles over the next six months – however, the latter figure has dropped from 29% from the last survey, suggesting recruitment struggles are easing for some organisations.
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One in 10 expect their overall headcount to decrease in the next three months, with 18% planning to make redundancies. However, a third still expect their employee base to grow.
Eighteen per cent of employers in the public sector expected their employee numbers to fall, twice as high as the private sector (9%).
The net employment balance – which measures the difference between employers expecting to increase staff levels in the next three months and those expecting a decrease – has fallen from +26 last quarter to +22 this quarter, the lowest level since winter 2020/21.
Employers in the construction sector are the most likely to increase headcount, while intentions to recruit were also strong in the information and communication sector, and transport and storage.
Net employment intentions in the private sector were at +27 but have fallen sharply to just +6 in the public sector. More than half (51%) of employers in the public sector have hard-to-fill vacancies, the CIPD found.
Many employers are tightening their purse strings following the bumper pay rises seen in 2023. For the first time since spring 2020, the anticipated increase in basic pay over the next 12 months has fallen.
The average predicted pay award is 4%, down from 5% last year. Anticipated settlements in the private sector fell from 5% to 4%, while public sector HR professionals expect to award 3%, also down from 5%.
This echoes research by XpertHR, which found recent pay awards have been lower than last year.
Jon Boys, senior labour market economist for the CIPD, said: “Pay growth has helped individuals but it leaves employers with a higher wage bill to cover.
“To see a sustained return to growth, there needs to be a real focus on boosting productivity by investing in workplace skills and technology. It’s also in employers’ interest to communicate with employees their wider benefits package and improve job quality to compensate if they are planning to reduce base pay increases.
“The cost-of-living crisis is not over for many workers so finding other ways to help them besides pay, such as providing flexible working where possible to reduce commuting or childcare costs can make a big difference.”
The CIPD recommended that employers take a varied approach to addressing hard-to-fill vacancies, by adopting inclusive recruitment approaches to broaden their talent pool and upskilling their existing employees.
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Although inflation is lower than it was this time last year, it has encouraged HR professionals to explore financial wellbeing “holistically”, by sending out communications about the existing benefits on offer to employees and highlighting sources of guidance for those struggling with money.
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