UK jobs machine ‘continues to deliver’ despite uncertainty.

Public sector pay and hiring intentions improve.

While the most recent figures from the REC suggest that employment decisions are still being held back by uncertain, data from the CIPD suggests Brexit uncertainty has yet to take its toll on employers’ hiring expectations. Figures from the organisation’s Labour Market Outlook says both public and private sector employers are expecting to increase staff numbers in the final quarter of 2019.

According to the organisation there has been a surge of confidence among public sector employers on increasing both pay and staff numbers in the next quarter. Although still positive, private sector pay award expectations have decreased, narrowing the gap between the public and private sector.

Overall, employer confidence remains robust with the report’s net employment score – a measure of employment confidence – remaining positive. It has grown from +18 to +22, driven by a larger proportion of employers expecting to increase, rather than decrease, total staffing levels. The score is highest in construction (+38), administration and support services (+30) and healthcare (+30). The uptick in hiring expectations was broad based across business sectors but saw a significant surge among public sector employers. The public sector employment balance rose sharply in the last quarter from +2 to +14. This marks its highest point in more than five years and was most likely buoyed by the Government’s signaling of the end of austerity.

However, despite ‘the end of austerity’ there are still challenges in both attracting and retaining staff in the public sector. Employers in public sector dominated industries record the highest incidence of hard-to-fill vacancies with 75 per cent of healthcare employers struggling to fill these roles, followed by public administration and defence (71 per cent) and education (68 per cent). Overall 67 per cent of organisations who are currently hiring have hard-to-fill vacancies.

Overall median basic pay award expectations for the next 12 months remain at 2 per cent. The survey found that 48 per cent of employers predict a pay increase in the next 12 months. Inflation remains the largest factor behind pay increases of 2 per cent or more, followed by market pressures such as recruitment and retention challenges.

The renewed confidence among public sector employers has meant that the gap between public and private sector employer intentions on pay has narrowed. The public sector continues an upward trend on pay award expectations, rising from 1.5 per cent last quarter to 2 per cent this quarter while private sector pay award expectations moved down from 2.5 per cent to 2.2 per cent.

While private sector pay award expectations have fallen, the proportion of private sector employers set to raise salaries in response to retention difficulties has increased from 65 per cent to 70 per cent.

“Despite the political uncertainty, employers have held their nerve and adopted a ‘business as usual’ approach to their hiring needs,” says Jon Boys, labour market economist for the CIPD.The UK’s jobs machine continues to deliver with businesses expecting staff numbers to increase in the final months of 2019. The easing of cost constraints on the public sector has seen hiring and pay expectations increase sharply in the past quarter, but healthcare employers continue to struggle with hard-to-fill vacancies.

“Lowered expectations about future wage growth in the private sector – where the majority of people are employed – are a worry and that suggest recent gains in pay won’t be sustained,” he adds. “Without a focus on productivity these gains are built on sand. A starting point is to focus on people management practices which can help workplaces get the most out of their people and unlock their productive potential.”

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