a barometer of hr trends and prospects 2013 by cipd

Overview of CIPD surveys

A barometer of HR trends and prospects2013

Chartered Institute of Personnel and Development

The CIPD is the world’s largest Chartered HR and development professional body, with 135,000 members – including over 84,000 professional members.

Our members include the next generation of HR professionals and many of the world’s most influential senior HR leaders from world-class organisations.

For the last 100 years we’ve been supporting HR to drive business performance. We set the standards for best practice in HR and its specialisms. It’s our aim to support and develop professional capability by shaping thinking, leading best practice and building HR’s profile in business today, and for the next 100 years.

cipd.co.uk

http://www.cipd.co.uk

A barometer of HR trends and prospects 2013 Overview of CIPD surveys 3

Contents

A barometer of HR trends and prospects2013

Findings from the 2012 surveys – a human capital checklist for UK plc 4

Introduction 5

Resourcing and talent planning 6

Reward management 9

Learning and talent development 11

Absence management 14

Employee outlook 17

Labour market outlook 19

The economy and labour market in 2013 20


Labour turnover 13%

Organisations experiencing recruitment difficulties 82%

Organisations experiencing retention problems 34%

The percentage of organisations that have a defined benefit (DB) pension scheme (final salary or career average) 20%

The percentage of employees that report being under pressure once or twice a week 41%

The percentage of employees that think it would be easy or very easy to find a new job if they lost their current position 12%

Training hours received per employee 24%

Median annual training budget per employee £276

Organisations that anticipated the funding of learning and development would increase in 2012 10%

Organisations that anticipated reductions in the funding of learning and development in 2012 39%

Absence 7 working days

per employee

Cost of absence £600 per employee

per year

Findings from the 2012 surveys – a human capital checklist for UK plc


Throughout 2012 the Chartered Institute of Personnel and Development (CIPD) surveyed every changing aspect of the world of work.

This eleventh annual people management and development barometer report is a compendium of individual surveys drawing out common themes and highlighting emerging trends. Alongside the existing battery of annual CIPD surveys, the CIPD produces a quarterly Outlook series that comprises the CIPD Labour Market Outlook, a survey of recruitment, redundancy and pay intentions among HR professionals; and the CIPD Employee Outlook, a snapshot of a random sample of employee attitudes.

The barometer report also looks ahead to the next 12 months with our annual employment forecast. The CIPD forecasts that the UK labour market faces two scenarios in the coming year. In the first scenario, the labour market will continue on its current upward trajectory, with employment levels continuing to rise. In the second scenario, which is consistent with the recent Office for Budget Responsibility forecast, unemployment will rise by 100,000. As the CIPD warned in summer 2012, some employers may be forced to make redundancies in 2013 if the growth prospects do not improve. Common to both scenarios, employers will continue to focus on labour costs, which will mean that salaries will fail to keep pace with inflation for the fourth year in a row.

The report also reviews the suite of backward-looking annual and quarterly surveys produced by the CIPD. Some of the information in these surveys thus relates to 2011 as well as 2012.

The summary of main findings can be read as a baseline human capital report for UK plc.Individual surveys looked at all the key issues facing HR practitioners:

• resourcingandtalentplanning• rewardmanagement• learninganddevelopment• absencemanagement• employeeattitudes

Our surveys are drawn from relatively large sample sizes and provide comprehensive coverage across all sectors and sizes of organisation. Each survey report is an invaluable source of benchmarking information for practitioners and policy-makers. This ‘all in one place’ compendium presents the main findings from each of our 2012 surveys and outlines the challenges facing HR practitioners in 2013.

Copies of the CIPD’s survey reports can be obtained free from our website at: cipd.co.uk/surveys

Introduction

http://www.cipd.co.uk/surveys


The number and nature of vacancies• Onaveragethenumberofpermanentvacancies

organisations attempted to fill in 2011 was much lower than before the 2008 financial crisis.

• Thenumberofvacanciesinverylargeprivatesector organisations fell during the same period compared with the previous 12 months, but increased slightly in small to medium organisations. In contrast, large public sector organisations report more vacancies, although considerably fewer than in 2008.

• Afifthoforganisationsbelievethattheabolitionof the Default Retirement Age (DRA) will mean they recruit fewer people.

• Oneinfourorganisationsreportthattheyhavereduced their use of agency workers since October 2011 when the Agency Workers’ Regulations came into force.

Attracting and selecting candidates• Whiletheeffectivenessofmethodstoattract

applicants varies according to organisation sector and size, the most effective methods overall were reported to be through organisations’ own corporate websites and recruitment agencies, as was the case last year. However, the number of employers using recruitment agencies has fallen year-on-year for the past three years.

• Theprivatesector,particularlymanufacturingand production organisations, were three times more likely than public sector organisations to include recruitment agencies among their most effective methods for attracting candidates.

• Localandnationalnewspaperswerelessfrequentlyranked among organisations’ most effective methods of attracting candidates compared with previous years, while more consider apprenticeships among their most effective methods.

• LabourturnoverforallUKemployeesis13%.

• Eighty-twopercentoforganisationsreporteddifficultyinfillingvacancies,upfrom75%inthe2011 survey.

• Themedianrecruitmentcostoffillingavacancywas£8,000forseniormanagers/directorsand£3,000forotheremployees,showingamodestincreasecomparedwithlastyear.

• Themostfrequentlycitedcauseofrecruitmentdifficultieswaslackofspecialistortechnicalskills(59%).

• Aroundone-third(34%)oforganisationsreporthavingnoretentiondifficulties,downfrom42%in2011.

• OneinfourorganisationsreportthattheyhavereducedtheiruseofagencyworkerssinceOctober 2011 when the Agency Workers’ Regulations came into force.

(Respondents: 522 HR practitioners in UK organisations)

RESOURCING AND TALENT PLANNING

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Annual survey report 2012

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Resourcing and talent planning

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• Overall,one-thirdoforganisationsreportthattheyhave reduced their use of recruitment partners, although only a minority have stopped using them and one in five have formed a closer business partnership with them over the past year.

• Themedianrecruitmentcostoffillingavacancywas£8,000forseniormanagers/directorsand£3,000forotheremployees(adjustingforaccuracy).

Recruitment difficulties• Oneinthreeorganisationsreportthatthelength

of their recruitment process has led to the loss of potential recruits.

• Eighty-twopercentoforganisationsreporteddifficulties in filling at least some vacancies over the past few months, with all sectors (but particularly the public sector) reporting more difficulties compared with last year.

• Therehasbeenastep-increase(particularlyinthe public sector) in the proportion reporting difficulties in filling vacancies for senior managers/directors.

• Managersandprofessionalsandtechnicalpositions were the most difficult vacancies to fill.

• Asinpreviousyears,themainreasonforrecruitment difficulties was a lack of necessary specialist or technical skills.

Employing younger workers • Aquarteroforganisationsreporttheyare

employing more 16–24-year-olds compared with one year ago.

• Nearlyone-thirdoforganisationsoperateastructured graduate recruitment programme. Their use has increased in larger organisations compared with previous years as well as in the manufacturing and production sector generally.

• Two-fifthsoforganisationsareconcernedthatthe increase in university tuition fees will make it harder to get the skills they need (rising to half of those with graduate recruitment schemes).

• Apprenticeshipsareofferedbytwo-fifthsoforganisationsoverall,withafurther14%planning to introduce them in the next 12 months. Twenty-eight per cent offer intern schemesand15%sponsorstudentsthroughuniversity.

• Nearlyhalf(46%)oforganisationsacrossallsectors report that if their organisation offered more apprenticeship programmes it would help them get the skills they need.

Resourcing in turbulent times • Halfoftheorganisationssurveyedreportthat

the economic climate has had a negative impact on their organisation’s resourcing budgets for 2012–13. The public sector is most likely to report reductions.

• Talentmanagementbudgetsdonotappeartohave been hit as much as resourcing budgets. Just one in ten report that their overall talent management spend has decreased in the last 12 months, while a quarter reported spend had increased. Half of organisations report the current economic situation has actually led to an increased focus on talent management.

• Changesinresourcingandtalentpracticesin2012 compared with 2011 reflect a stronger focusoncostsandreductionsinbudgets.Moreorganisations anticipate they will be focusing on developing talent in-house, retaining rather than recruiting talent, redeploying people into new roles and reducing their reliance on recruitment agencies and external consultants for resourcing and development.

• Morethanone-quarterreporttheywillbereducing the number of new recruits they hire in2012andafifth(19%)implementingarecruitment freeze.

• Atthesametime,however,moreorganisationsreporttheywillberecruitingforkeytalent/nicheareasin2012(60%)comparedwith2011(50%).Thefindingsalsosuggestthatmoretime and effort will be invested in the quality of candidates hired.

• Nearlythree-quarters(71%)reportthattheyhave noticed an increase in the number of unsuitable applicants, while three-fifths report that competition for talent is greater now.


The impact of the 2012 Olympic Games • Overall,morethanone-quarteroforganisations

reported that they would be allowing employees time off to volunteer for the 2012 Olympic Games.

• Halfoforganisationsimplementedparticularresource planning practices for the 2012 Olympics.Nearlyone-thirdreportedtheywouldbe reminding employees of existing flexible working opportunities and making TVs available in the workplace, while more than one-quarter reported they would try to accommodate requests to work from home.

Diversity • Overall,inlittlechangefrompreviousyears,

just over half of organisations have a diversity strategy,risingto89%ofpublicsectororganisations.

• Thisyearwesawusageofdiversitypracticesreturn to 2010 levels. Last year we had noted a reduction in the use of some methods, possibly as a result of the pressures of the economic downturn focusing attention elsewhere.

• Thereisamarkedincreaseintheproportionwhoreport they are making attempts to employ the long-termunemployed(52%,upfrom19%in2011) and those who are actively trying to attract talentofallages(59%,upfrom45%lastyear).

• Whiletheproportionofnot-for-profitorganisations with a formal diversity policy remains similar to last year, those with a formal policy are now implementing a wider range of practices in line with the public sector.

Labour turnover• Themedianlabourturnoverrate(12.7)issimilar

to last year (12.5) but less than previous years. There are considerable differences within and between sectors.

• Morethanone-thirdoforganisationsreportthattheir turnover had increased in 2011 compared with2010,whileaquarter(26%)reportedithaddecreasedandtwo-fifths(38%)thatithadremained the same.

• Therewasconsiderablevariationwithinmanufacturing and production and public services, with more than two-fifths reporting turnover had increased and more than a third that it had decreased. Voluntary sector organisations were least likely to report their turnover had increased, while private services were least likely to report turnover had decreased.

Employee retention• Onlyone-thirdoforganisationsexperiencedno

difficulties in retaining staff during the previous year(2011survey:42%;2010survey:45%;2009survey:31%).

• Managersandprofessionalsweremostdifficultto retain, as in previous years.

• Mostorganisationshavetakenoneormorestepsto address staff retention in 2011, although one infive(19%)reportthatnospecificretentioninitiatives were undertaken. Our findings suggest that more organisations were focused on retention prior to the economic downturn, although there is some indication that addressing retention is increasingly returning to the agenda, at least in the private sector.

• Themostfrequentlycitedactionstakenbyemployers to address retention were: improving the people management skills of line managers and increased learning and development opportunities; these were also the methods most commonly rated most effective.

For more information on the Annual Resourcing and talent planning survey, visit www.cipd.co.uk/resourcingandtalentplanningsurvey

http://www.cipd.co.uk/resourcingandtalentplanningsurvey


Reward strategy• Higherlevelsofpaydispersioncanbefound

amongthemanagement/professionalemployeegroup, where the ratio between the lowest paid andthehighestpaid(medians)is1:3.7comparedwith a ratio of 1:2.2 for other employees. The public sector has the highest pay dispersion, with aratioof1:5.7betweenthelowestandhighestpaid(medians)inthemanagement/professionalgroup.

• Levelsofpaytransparencydonotappeartobehighinourrespondentorganisations.Mostagreed that their organisations approach pay as a private matter and will only provide pay information when required to do so under legislation.Morerespondentsdisagreedthanagreed that their organisations make pay policies and practices public with the intention that pay information is as transparent as possible.

Base pay• Nearlyhalfofallrespondentssaidtheir

organisationsuseindividualrates/rangesorspotsalaries to manage base pay; this is the most common form of base pay management for all types of employee. Broad-banding is the next mostpopularformanagers/professionalstaff,while for other employees pay spines are also common.

• Todeterminepayrates/salarylevelsandranges,most respondents said their organisations are primarily guided by their ability to pay, closely followed by the use of market rates (with a job evaluation scheme). A quarter of organisations use collective bargaining, particularly for non-managerial/professionalemployees,predominantly in the public sector.

• Individualperformanceisthemostcommoncriteria for determining pay progression, with

• Overaquarterofrespondentssaidtheirorganisationsoperateashareschemeorotherlong-termincentive(LTI) plan.

• Onlyafifthoforganisationshaveadefinedbenefit(DB)pensionscheme(finalsalaryorcareeraverage).However, most DB schemes are now closed (either to new entrants or to new entrants and future accruals) or are being wound up.

• Higherlevelsofpaydispersioncanbefoundamongthemanagement/professionalemployeegroup,wheretheratiobetweenthelowestpaidandthehighestpaid(medians)is1:3.7comparedwitharatioof1:2.2for other employees.

• Nineoutoftenorganisationscontributetoapensionscheme.

• Fourintenorganisationsintendedtomakechangestotheirpensionschemesin2012.Themostcommonplanned changes identified were to comply with auto-enrolment and to increase employees’ contributions to a DB scheme.

(Respondents: reward managers in 455 organisations)

Reward management

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REWARDMANAGEMENT

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over three-quarters of all respondents saying this is used in their organisations. Over half use market rates as criteria for progression while the least common criteria is length of service.

• Abilitytopay,inflationandthemovementinmarket rates were the top three most important factors in determining the size of pay reviews.

Performance-related reward, incentive and recognition • Two-thirdsoforganisationssurveyedusesome

form of performance-related reward, incentive or recognition scheme.

• Individualbonusesarethemostcommonformofperformance-related reward scheme, followed by merit pay rises.

• Ofrespondentswithperformancepayschemes,nearly half have goal-sharing (group bonuses based on specific performance objectives) operating in their organisations.

• Organisationstendtotakeoneoftwoapproaches to coverage of employees in bonus andincentiveschemes:91–100%employeecoverage is most common, closely followed by 0–10%.

• Justoverathirdofrespondentsoperatingperformance-related schemes provide individual non-monetary recognition awards while one in five use group-based non-monetary recognition awards.

• Overaquarterofrespondentssaidtheirorganisations operate a share scheme or other long-term incentive (LTI) plan. Of those that do, executive share options are most common, followed by company share option plans.

Pensions and benefits • Nineoutoftenorganisationsinoursurvey

contribute to a pension scheme. • Definedcontribution(DC)schemes(suchas

occupational DC, GPP and stakeholder) are the most common.

• Onlyafifthoforganisationshaveadefinedbenefit (DB) pension scheme (final salary or career average). However, most DB schemes are now closed (either to new entrants or to new entrants and future accruals) or are being wound up.

• Fourintenorganisationsareintendingtomakechanges to their pension schemes this year. The most common planned changes identified are to comply with auto-enrolment and to increase employees’ contributions to a DB scheme. Public sector employers are most likely to ask employees to pay more into a pension scheme.

• Inpreparingforpensionsauto-enrolment,69%of our organisations are going to be seeking the help of their pensions provider.

• Nearlyoneinfourorganisationsinoursurveyoffervoluntary/affinitybenefits;asimilarnumberalso offer flexible benefit schemes but, after pensions, the most common type of benefit offeredisflexible/homeworking.

• Themostcommonbenefitsamongorganisationsin our survey include: annual leave in excess of statutory, training and career development, childcare vouchers, free tea, coffee and cold drinks, a Christmas party or lunch, and on-site car parking.

• Despiteemployeefinancialdistress,nearlyeightout of ten employers offer no financial education to their employees. Of those that do, group seminars are the most common method of delivery.

• Fewerthanoneinfiveofrespondentorganisations provide total reward statements. Paper statements are the most common method of delivery, followed by online delivery.

• Themajoritypredictthattheirbenefitspend(excluding pensions) will remain constant in the year ahead. Just over a third see it increasing, while one in ten predict benefit spend will decrease.

• Thetopthreereasonsgivenforincreasestobenefit spend are: increasing benefits costs, because more staff will be employed, and to increase or maintain the attractiveness of the benefits package.

For more information on the Reward management survey, visit www.cipd.co.uk/rewardmanagementsurvey

http://www.cipd.co.uk/rewardmanagementsurvey


Trends in learning and development • In-housedevelopmentprogrammesand

coaching by line managers are still seen to be themosteffectivepractices.Nevertheless,moreorganisations report on-the-job training among their most effective methods, perhaps reflecting an increased focus on lower-cost practices due to economic pressures.

• Themostcommonorganisationalchangeexpected to impact on learning and development over the next two years is greater integration between coaching, organisational development and performance management to drive organisational change, reported by nearly half of organisations.

• Athirdofpublicsectororganisationsanticipategreater use of e-learning across the organisation over the next two years (compared with a fifth of other organisations) and a quarter expect less use of classroom and trainer-led instruction (compared with less than one in seven of other organisations).

Talent management • Slightlyfewerorganisationsreportthey

undertake talent management activities comparedwithlastyear(2012:54%;2011:61%).Intwo-fifthsoforganisations,talentmanagement activities cover all or most employees, but most focus on high-potential employees and senior managers. As in previous years, developing high-potential employees and growingfutureseniormanagers/leadersremainthe key objectives.

• Lessthanthree-fifthsoforganisationswithtalent management activities believe they are effective,withnearlyoneinsix(15%)reportingthey are ineffective. These figures show a slight improvement on last year. As in previous years, coaching is most commonly rated among the most effective talent management activities, followed by in-house development programmes.

• Themedianannualtrainingbudgetperemployeewas£276,lessthanlastyear(£350),withaparticularly dramatic reduction in the public sector. The median number of training hours employees receive per year was 24, again a reduction on last year.

• Justoneintenorganisationsanticipatedthatthefundingoflearninganddevelopmentwouldincreaseinthenext12months.Nearlytwo-fifthsanticipatedreductions.

• In-housedevelopmentprogrammesandcoachingbylinemanagersarestillseentobethemosteffective practices.

(Respondents: 766 learning and development managers)

Learning and talent development

Chartered Institute of Personnel and Development

151 The Broadway London SW19 1JQ UK

Tel: +44 (0)20 8612 6200 Fax: +44 (0)20 8612 6201

Email: [email protected] Website: cipd.co.uk

Incorporated by Royal Charter Registered charity no.1079797


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Management and leadership skills • Nearlythree-quartersoforganisationsinEngland

report a deficit of management and leadership skills. For two-thirds it is senior managers who lack theseskills,whilethevastmajority(85%)reportline managers and supervisors lack these skills.

• Organisationsthatplacehighimportanceon management and leadership skills when promoting individuals and those that provide additional training are less likely to report they have a management and skills deficit although, even taking these measures, the proportion with a deficit is still high. On average a quarter of the workforces in the organisations surveyed have line management responsibilities, so there is high demand for these skills.

• Oneinsevenorganisationsdonotmakeanyattempt to evaluate individuals’ management andleadershipskillsforpromotions.Nearlyhalfevaluate management skills informally, while two-fifths use 360-degree feedback and a quarter use engagement surveys.

• Two-thirdsoforganisationsprovidenewmanagers with additional training. Reasons given for not doing so are that managers do not need anyadditionaltraining(23%),budgetissues(28%)andlackoftime(24%).

• Organisationsaremostlikelytorespondtopoor feedback for line managers and leaders by giving appropriate feedback and a learning and improvement plan. Far fewer organisations have given informal warnings or penalised managers through the performance review. The public sector is least likely to take action in response to poor feedback for line managers and leaders.

Leadership development• Asinpreviousyears,themainleadership

skills that organisations lack are performance management skills, leading and people management skills, and skills to manage change.

• Mostorganisations(80%)reportthattheyintended to conduct leadership development activities in 2012. The most common focus of these activities, showing an increase compared

with previous years, was to improve the skills of leaders to think in a more strategic and future-focusedway(54%).Othercommonobjectivesinclude developing high-potential individuals valued by the organisation, producing a common standard of behaviour for those in leadership roles and enabling the achievement of the organisation’s strategic goals.

Development for managers with international responsibilities• Two-fifthsoforganisationsthatoperateinmore

than one country carry out specific learning and talent development with managers who have international responsibilities.

• Themostcommonmethodsusedtodevelopthe skills of managers with international responsibilities are conference calls to facilitate cross-bordercoachingandmentoring(53%),andinternationalconferences(52%).

• Largerorganisationsaremorelikelytouseprogrammes to nurture leadership talent internationally. The most popular programmes used were company-wide talent management programmes for high-potentials and coaching and mentoring to help international staff move into key roles. The latter has increased in popularity compared with previous years.

Individual and team learning diagnostics• Manyorganisationsuseoneormoremethodsof

learninganalysis/diagnosticsintheirlearninganddevelopment practice. Systematic approaches (such as ‘Plan’ – ‘Do’ – ’Check’) were most common, followed by Belbin team roles and theHoneyandMumfordLearningStylesQuestionnaire (LSQ).

• Newinsightsonlearninganddevelopmentfromareas such as neuroscience, social psychology, economics, computing and the natural sciences are currently rarely incorporated into learning and development practice in organisations. One in six is incorporating the connection between exercise and increased learning performance into their practice.


Innovation and creativity• Overall,two-fifthsoforganisationsreportthat

innovation and creativity are critical to their organisationandthateveryoneisinvolved.Morethan twice as many private sector organisations as public report that this is the case.

• Themainfocusofinnovationstrategiesistoensure organisations can deliver faster and more efficientlytocustomers(53%),althoughthisisless common in the public and non-profit sectors.

• Overhalfofmanufacturingandproductionorganisations have specific project teams or departments which focus on innovation and creativity. The other sectors are less likely to have specialist or project teams but rather tend to encourage managers to innovate through business as normal.

Economic situation and training spend • Organisationscontinuetofacedifficulteconomic

circumstances. Overall, half report that their economic circumstances have declined in the past 12 months, rising to three-quarters in the public sector. This has had a corresponding impact on the resources available for learning and development, with a third reporting resources have declined over the past year. The public sector was particularly likely to report that learning and development funding and headcount has reduced.

• OverathirdofL&TDdepartmentsreportedthey had become more business-focused in 2012, continuing a trend observed in 2011. Over a third of public sector organisations have undergone a reduction in external suppliers and moved to in-house provision, redundancies of staff, rationalisation and ‘reduction’ of departmentsincludingredeployment,while22%have closed or rationalised their training facilities.

• Mostorganisationshaveatrainingbudget.Training budgets usually cover external courses andconferences(95%),hiringexternalconsultantsandtrainers(81%)andbooks,trainingmanuals,andsoon(80%).Theycover training technology in more than half of organisations(56%).

• Themedianannualtrainingbudgetperemployeewas£276,lessthanlastyear(£350),with a particularly dramatic reduction in the public sector. The median number of training hours employees receive per year was 24, again a reduction on last year. In very similar findings to last year, just one in ten organisations anticipated that the funding of learning and development wouldincreaseinthenext12months.Nearlytwo-fifths anticipated reductions.

For more information on the Learning and talent development survey, visit www.cipd.co.uk/learningandtalentdevelopmentsurvey

http://www.cipd.co.uk/learningandtalentdevelopmentsurvey


Absence levels • Theaveragelevelofemployeeabsencehasfallen

comparedwithlastyearfrom7.7daysto6.8per employee per year. The private services and public sector report the largest reductions.

• Publicsectorabsencehasfallentothelowestlevel recorded for this sector since we recorded absence levels by sector in 2002, with a figure of 7.9daysperemployeeperyear.

• Mostorganisations,particularlyinthepublicsector, record their annual employee absence rate.

• Onaverage,publicandnon-profitemployeeshaveapproximately two days more absence per year thantheirprivatesectorcounterparts.Manualworkers have one more day absence, on average, than non-manual workers. Absence levels also tend to increase with organisation size.

• Overall,moreorganisationsreportthattheirabsencelevelshavedecreased(41%)comparedwith the previous year than say it has increased (27%).One-thirdreportithasremainedthesame.

• Themajorityofrespondents,particularlyinorganisations with high levels of absence, believe it is possible to reduce absence.

Length of absence • Two-thirdsofworkingtimelosttoabsenceis

accounted for by short-term absences of up to seven days. A fifth is attributed to long-term absences (four weeks or more).

• Lengthofabsencevariesacrosssectors.Ahigherproportion of absence in the public sector is due to long-term absences of four weeks or longer.

• Smallerorganisationsaremorelikelytoattributea higher proportion of their absence to short-term leave compared with larger organisations.

Cost of absence • Lessthanhalfofemployersmonitorthecost

of absence. The public sector and larger organisations are most likely to do so.

• Theaverageannualcostofemployeeabsenceper employee varies considerably across organisations, partly because they include different costs in their calculations. On average, the reported cost of absence per employee is less than last year and back to levels reported in 2010 (2012median:£600;2011median:£673;2010median:£600).

• Thepublicandnon-profitsectorsreporthighercosts of absence per employee than the private

• Theaveragelevelofemployeeabsencehasfallencomparedwithlastyearfrom7.7daysto6.8per employee per year. The private services and public sector report the largest reductions.

• Two-fifthsofemployersoverall(52%inthepublicsector)reportedthatstress-relatedabsencehadincreased in the 12 months to June 2012. The most common cause of stress, as in previous years, is workload. This year, however, it appears to be even more of an issue.

• Nearlyathirdoforganisationsreportanincreaseinpeoplecomingtoworkillintheprevious12months and more than two-fifths had noted an increase in reported mental health problems.

• Onaverage,thereportedcostofabsenceperemployeeis£600.

(Respondents: 667 HR practitioners)

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sector. There is, however, a clear drop in the median cost of absence per employee this year in the public sector, which is not observed in the other sectors.

Occupational sick pay• Mostemployerssurveyed(81%)provide

occupational sick pay to all employees. A further 10%provideittosomeemployeesdependingon their level in the organisation or the nature of their role.

• Thereisconsiderablevariationinhowlongorganisations provide occupational sick pay to an employee (with at least one year’s service) who is on long-term sick leave. Public sector employers provide full pay and then reduced pay for significantly longer than employers from other sectors.

• Oneintenorganisationshaveincreasedorextended their occupational sick pay over the past 12 months and a similar proportion have decreased or restricted it.

Causes of absence• Minorillnesses(suchascolds,flu,stomach

upsets, headaches and migraines) are by far the most common cause of short-term absence.

• Musculoskeletalinjuries,backpainandstressare the next most common causes of short-term absence. Stress is more common for non-manual workers, while musculoskeletal injuries and back pain are more common for manual workers.

• Feweremployersrankabsencesnotduetogenuine ill health among their top five most common causes of short-term absence compared withlastyear.Non-genuineabsenceisreportedlymost common in private services organisations.

• Themostcommoncausesoflong-termabsenceare stress, acute medical conditions (for example stroke, heart attack and cancer), mental ill health, musculoskeletal injuries and back pain. Musculoskeletalinjuriesandbackpainareparticularly common for manual workers while stress is more common for non-manual workers.

• Stressisparticularlycommoninthepublicand non-profit sectors. The public sector is also more likely to rank mental ill health and musculoskeletal injuries among its top five causes of long-term absence.

Work-related stress• Two-fifthsofemployersoverall(52%inthe

public sector) report that stress-related absence has increased over the past year. The most common cause of stress, as in previous years, is workload. This year, however, it appears to be even more of an issue.

• Othertopcausesofstressatworkincludemanagement style, non-work factors such as relationships and family, relationships at work and considerableorganisationalchange/restructuring.

• Considerableorganisationalchange/restructuringand job insecurity are more commonly ranked in the top causes of stress in the public sector than in the private.

• Three-fifthsoforganisationsaretakingstepsto identify and reduce stress in the workplace. Nevertheless,morethanaquarter(27%)oforganisations that report stress is one of the top five causes of absence are not taking any steps to address it.

• Justoveraquarterofemployersreporttheyhaveincreased their focus on stress management over the past 12 months. As in previous years, public services employers are most likely to be proactively managing stress; however, the proportion doing so has fallen in comparison with previous years.

• Popularmethodstoidentifyandreduceworkplace stress include staff surveys, training formanagers/staffandflexibleworkingoptions/improved work–life balance.

Managing absence • Almostallorganisationssurveyedhaveawritten

absence/attendancemanagementpolicy.• Halfhaveintroducedchangestosomeaspectof

their approach in the last year, with public sector organisations most likely to have made changes.

• Overall,justunderhalfofemployershaveatarget in place for reducing employee absence, althoughthisrisesto69%inthepublicsector.

• Themostcommonmethodsusedtomanageshort-term absence are return-to-work interviews, trigger mechanisms to review attendance, giving sickness absence information to line managers and disciplinary procedures for unacceptable absence. These are also seen to be the most effective methods.


• Themostcommonmethodsusedtomanagelong-term absence – return-to-work interviews and occupational health involvement – are also reported to be the most effective, as was the case last year.

• Linemanagerstakeprimaryresponsibilityformanagingshort-termabsencein70%oforganisationsoverall,risingto87%inthepublicsector. They take responsibility for managing long-termabsencein53%oforganisationsoverall(74%ofthepublicsector).Notallorganisations, however, train managers in absence-handling and fewer provide them with tailored support.

• Privatesectoremployersaremuchmorelikelytorestrict sick pay than the public sector. They are also more likely to offer private medical insurance and attendance bonuses or incentives.

• Publicsectoremployersaremorelikelytousea range of methods aimed at promoting good health and flexibility. They are also more likely to report that attendance is driven by the board, althoughthisisonlythecasefor28%ofthepublicsector(10%oftheprivate).

The Statement of Fitness to Work • Thevastmajorityoforganisationsacrossall

sectors have used the ‘fit note’, but just one in ten believe it has helped to reduce absence levels, possibly because only one in ten think it is being used effectively by GPs.

• Halfofemployersreportthatthefitnotepromptsconversationsaboutabsence/healthbetween staff and line managers and just under a third that it helps line managers to manage absence.

Impact of the abolition of the Default Retirement Age (DRA) on absence • Veryfeworganisationsreportthattheabolition

of the DRA has had an impact on absence levels. A quarter of organisations have, however, increased their use of flexible working practices as a result of the abolition.

Employee well-being • Therehasbeenagradualincreaseoverthepast

few years in the proportion of organisations with anemployeewell-beingstrategy.Morethanhalfof organisations now have one in place.

• Themostcommonlyprovidedwell-beingbenefitsare access to counselling services and employee assistance programmes, but the benefits provided vary considerably across sectors.

• Asinpreviousyears,thepublicsectorismostlikely to promote well-being through benefits to facilitate healthy lifestyles. The private sector is more likely to provide insurance for employees.

• Nearlyhalfoforganisationsreporttheirwell-beingspend has not changed compared with the last financial year. Just under a fifth of organisations report their well-being spend has increased. Similar changes are anticipated in 2013.

• Inlittlechangefromlastyear,lessthanaquarterof respondents report their organisations evaluate the impact of their well-being spend.

Employee absence and the recession• Two-fifthsofpublicsectororganisationsandat

least a fifth of organisations from other sectors report they will be making redundancies over the next six months. Overall, just a third of the organisations surveyed report they won’t be making any redundancies.

• Nearlyathirdoforganisationsreportanincreasein people coming to work ill in the last 12 months and more than two-fifths had noted an increase in reported mental health problems. Both of these issues have increased compared with previous years and are more common in organisations that are anticipating redundancies in the next six months.

• Nearlytwo-thirdsofemployerswhohavenoticedan increase in presenteeism in the last 12 months are taking steps to discourage it.

• Lessthanathirdoforganisations(30%)reportthey have increased their focus on employee well-being and health promotion as a result of the economic context.

For more information on the Absence management survey, visit www.cipd.co.uk/absencemanagementsurvey

http://www.cipd.co.uk/absencemanagementsurvey


Job satisfaction and engagement • TheEngagementIndexshowsthatthe

proportion of employees engaged has remained consistent throughout the year in ranging between38%and39%.

• Accordingtotheautumnreport,thereisastronglink between employees who are looking for a new job and employee engagement. Of the 38%ofemployeeswhoareengaged,just7%are looking for a new job, compared with a surveyaverageof19%.

• Overall,jobsatisfactionremainshighat+47according to the autumn report. However, the overall score is made up of several differences across sectors. Currently, employees in the public sector(+47)andprivatesector(+47)areequallysatisfied with their jobs.

Employee attitudes towards managers• Employeescontinuetobegenerallypositive

in their attitudes towards their immediate line managers. Overall, employees are most likely tofeelthattheirmanagersalways/usuallytreatthemfairly(71%)andarecommittedtotheirorganisation(72%).Ontheotherhand,employees are least likely to say that their manageralways/usuallycoachesthemonthejob(30%),discussestheirtraininganddevelopmentneeds(41%)orgivesthemfeedbackonhowtheyareperforming(46%).

• Overall,respondentsarelesspositiveintheirattitudes towards their senior managers compared with their immediate managers. However, overall scores this quarter for perceptions of leaders has improved during the course of 2012 for treating employees withrespect(+16),havingtrustinleaders(+7),confidence(+7)andclarityofvision(+26).Therehas also been improvement around perceptions of consultation on important decisions, but this is still strongly a negative net perception (–20).

Employee outlook

• TheEngagementIndexshowsthattheproportionofengagedemployeeshasremainedconsistentthroughouttheyearinrangingbetween38%and39%.

• Theproportionofstaffsayingtheyareunderexcessivepressureeithereverydayoronceortwiceaweekhasincreasedgraduallyin2012.Morethantwo-fifthsofemployeesnowreportbeingundersuchpressureonceor twice a week. Public sector employees are most likely to report they are under excessive pressure.

• Theproportionofemployeessayingitislikelyorverylikelytheycouldlosetheirjobasaresultoftheeconomic downturn has shown little movement in 2012. According to the most recent autumn report, a fifth ofemployeesreportthis.Inall,12%ofemployeesthinkitwouldbeeasyorveryeasytofindanewjobiftheylost their current position, unchanged compared with the previous quarter.

(Employee Outlook 2012 (Respondents: 2,000 employees)

Winter 2012

Employee Outlook


Communication and advocacy• Overhalfofrespondents(55%)feelfullyorfairly

well informed about what is happening within their organisations; this has stayed fairly constant in 2012.

• Morethanhalfofthesample(52%)wouldbe very likely or likely to recommend their organisation as an employer to others.

Views on values• Justoveraquarterofemployees(28%)saythey

are aware of the values of the organisation they workfortoagreatextent,while47%saytheyareawaretosomeextent.Atotalof15%ofrespondents report they are not at all aware of theirorganisation’svalues.Just5%ofemployeessay their organisation does not have any values.

• Almostthree-quarters(72%)ofemployeesbelieve it is important or very important for organisations to have defined values which govern employees’ behaviour.

• Almostsixintenemployeesagree(43%)orstronglyagree(15%)theirpersonalvaluesmatchthoseoftheirorganisation.Nearlyathird(29%)neitheragreenordisagree,while11%eitherdisagree(9%)orstronglydisagree(2%).

• Justoverhalfofrespondentsagreethattheirorganisation’s values positively influence people’s behaviour at work. A third neither agree nor disagree,with13%disagreeing(10%)orstronglydisagreeing(3%).

• Board-leveldirectorsandotherseniormanagersare most likely to agree that their organisation’s values positively influence people’s behaviour at work. Line managers and middle managers are least likely to agree that this is the case.

• Almostthree-quartersofengagedemployeesagree or strongly agree that their organisation’s values positively influence people’s behaviour, comparedwithjust32%ofstaffwithneutrallevelsofengagementandjust18%ofdisengaged employees.

Pressure at work • Theproportionofstaffsayingtheyareunder

excessive pressure either every day or once or twiceaweekhasincreasedto41%,duringthecourse of 2012.

• Publicsectoremployeesaresignificantlymorelikely to report they are under excessive pressure than employees in the other two main sectors, with50%sayingtheyareunderexcessivepressureeithereveryday(21%)oronceortwiceaweek(29%).

Work–life balance• Theproportionofemployeesagreeingorstrongly

agreeing they achieve the right work–life balance hasincreasedto61%.

Employee attitudes and the economic downturn• Theproportionofemployeessayingitislikelyor

very likely they could lose their job as a result of theeconomicdownturnis20%.

• Inall,12%ofemployeesthinkitwouldbeeasyor very easy to find a new job if they lost their current position.

• Justoverathirdofemployees(36%)reporttheirorganisation has made redundancies as a result of the economic downturn. The proportion of public sector staff saying their organisation has made redundancies has remained fairly static at 57%(56%lastquarter).Inall,29%ofprivatesector employees report their organisation has made redundancies.

• Theproportionofworkerssayingtheirorganisation is planning to make redundancies is currently13%.

Job-seeking• Justunderafifth(19%)ofrespondentsare

currently looking for a new job with a different employer(summer:20%).Respondentsfromthevoluntary sector are most likely to be seeking out newopportunities(26%),withthosefromtheprivatesectorleastlikelytobe(19%).

• Seniormanagersordirectorsbelowboardlevel(28%)aremostlikelytobelookingforanewjob. With regard to length of service, those employees who have been with their employer for one to two years are most likely to be actively seekinganewjob(32%).

For more information on the Employee outlook survey, visit www.cipd.co.uk/employeeoutlook

http://www.cipd.co.uk/employeeoutlook


Key findings• Thenetemploymentbalance–whichmeasures

the difference between the proportion of employers who expect to increase staff levels over those who expect to decrease staff levels – increasedto+7from+5inthefinalquarterof2012. The private sector employment balance hasfallento+18from+28comparedwiththreemonths ago, whereas the public sector balance hasimprovedfrom–36to–17duringthesameperiod.

• Almostafifth(17%)ofemployerssaytheyhave increased their use of casual workers or employees on zero-hour contracts during the past year. Public sector employers are more likely to report that they have increased their use of hiring temporary and casual workers or employees on zero-hour contracts in 2012.

• Aroundafifthsaythattheyplantoemployfewer agency workers in the 12 months to September 2013. These developments may also reflect, in part, employer concerns about the costs associated with the Agency Workers Directive.

• Morethanthreeinfiveprivatesectorcompanies(61%)saytheyareeitherconfidentorfairlyconfident about the growth prospects of their organisation in 2013. On the downside, around a quarter of private sector firms report that they are not confident about the growth prospects of their firm at all in the next year.

• Basicpayawardexpectationsforthenext12monthshaveedgedupto1.7%accordingtothe most recent autumn report. Average basic pay award expectations in the public sector haverisento0.6%from0.2%.Meanwhile,pay expectations in the private sector have also increasedto2.6%from2.5%.

• Theproportionofemployersthatexpectedstafflevelstoincreaseagainstthosethatexpectedthemtodecreaseincreasedto+7inthethreemonthstoDecember2012from+5inthethreemonths to September 2012. Reflecting the official labour market statistics, which have shown strong employment growth in 2012, the report’s projections have been positive in each quarter of 2012.

• Averagepayexpectationshaverangedbetween1.5%and1.7%duringthecourseof2012.

(Respondents: HR practitioners in 1,000+ UK organisations)

Labour market outlook

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Labour Market Outlook

Autumn 2012

Labour Market Outlook

Au

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Mark Beatson, CIPD Chief EconomistOne year ago, pessimism and uncertainty were present in just about every assessment of economic prospectsfor2012.Mostforecastersexpectedmodest growth, as in 2011. But even this prognosis was too optimistic. The UK economy entered recession again in the first half of 2012 and, despite a recent recovery, it is now expected to have contracted marginally over the year as a whole. Against this background, the UK labour market has defied all expectations. Employment has increased by about half a million and unemployment has fallen. Looking ahead, 2013 is expected to be a year when growth begins to pick up but the situation in Europe, in particular, still presents formidable risks for the UK. The question is whether the UK can continue to sustain jobs growth against this economic background.

Review of economic and labour market developments in 2012The economic forecast published by the independent Office for Budget Responsibility (OBR) alongside the AutumnStatementinNovember2011acknowledgedthat the economy was entering a difficult period. The headline measure of gross domestic product (GDP) was expected to be flat in the first half of 2012 before recovering in the second half of the year, with overall growthin2012of0.7%.Thiscompareswithanestimatedout-turnfor2011of0.9%.

Even these modest expectations turned out to be too optimistic. Output fell in the first two quarters of 2012 as the UK entered a ‘double dip’ recession, although the latest figures, for the third quarter of2012,showarecoveryinoutput.Nevertheless,the latest OBR forecast, published alongside the December 2012 Autumn Statement, expects output for2012asawholetohavefallenby0.1%.

One factor explaining the UK’s poor growth performance has been very difficult international conditions, especially the prolonged crisis (or series of crises) in the eurozone. The Organization for Economic Co-operation and Development (OECD) expects output across the Eurozone to fall by0.4%in2012(seeFigure1).EvenGermany,previously the motor of the Eurozone, is only forecasttogrowby0.9%.Italy,Spain,Portugaland Greece are all expected to see output fall as they attempt to bring their public finances under control through cuts in public expenditure and increases in taxation. Low growth in Europe, together with some weakening of the euro relative to the pound, has meant that UK exports to these markets did not make the expected contribution to growth in 2012. The process of fiscal consolidation taking place in the UK meant, as expected, that the UK government sector could not take up the slack through increased public expenditure or reduced taxation. In addition, higher than expected inflation meant that household incomes were squeezed by more than expected, and this had a knock-on effect on consumption.

Against this background, 2012 should have been a very difficult year for the labour market. InNovember2011,theOBRforecastwasthattotal employment would remain flat throughout 2012 at 29.1 million, while the number of people unemployed on the headline (ILO) measure would increase from 2.5 million to 2.8 million.

Recall that these forecasts were based on outputincreasingby0.7%,whenitislikelythatoutput will turn out to be flat or have fallen. The implication is that the OBR, if it had predicted growth correctly, would have expected employment to fall in 2012 and unemployment to rise further. Yet this did not happen. Employment increased by 500,000 between the third quarter of 2011 and the third quarter of 2012. Unemployment fell by 100,000 over the same period. This defied forecasters’ expectations as well as seeming to defy conventional economic wisdom.

The economy and labour market in 2013


The puzzle of employment growth in 2012During the first two quarters of 2012, total employment is estimated to have increased from 29.1 million to 29.5 million, despite these being quarters when output fell. In the third quarter of 2012,outputisestimatedtohaveincreasedby1%,with employment increasing by a further 100,000. All of this jobs growth was in the private sector. Excluding changes in classification, public sector employment fell by 114,000 between the third quarter of 2011 and the third quarter of 2012.There are a number of potential explanations why the current recession has been relatively ‘jobs rich’ compared with the recessions of the early 1980s and early 1990s – when smaller falls in output produced higher levels of unemployment. These may shed some light on why employment continued unexpectedly to grow in 2012.

One potential explanation is growth in part-time work – effectively sharing the available paid employment among more people. In the year to August–October 2012 (the latest figures at the time of writing), the number of people working part-time increased by 288,000 whereas the number working full-time increased by 210,000. In addition, the

number of part-time workers who said they were doing so because they could not find a full-time job increasedby125,000,anincreasefrom16.7%ofpart-timeworkersto17.7%.

Involuntary part-time work can be seen as one form of‘underemployment’–definedbytheONSaspeople in employment who want to work longer hours (either in their current job or in another job) and are available to work longer hours. According totheONS,in2012justover3millionpeoplewere underemployed on this definition. However, growth in part-time work and underemployment does not appear to be a prime cause of the increase in employment during 2012. The total number of hoursworkedhasincreasedby2.6%inthepastyear. Average weekly hours worked have increased in the past year for both full-time and part-time workers. There may be a significant number of people wanting to work more hours, but this has not increased rapidly in the past year and hence is not sufficient on its own to explain recent labour market developments.

Another potential explanation is what has been termed ‘labour hoarding’. Faced with a downturn in demand, rather than resorting immediately to

Figure 1: OECD growth forecasts for 2012

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redundancies, organisations have been finding ways to preserve employment levels. The rationale for this is that firing in a downturn and recruiting again in an upturn both involve significant financial and productivity costs. Organisations in good financial shape have been seeking to avoid these costs by maintaining employment, possibly accompanied by cost reduction measures such as wage freezes and reductions in working hours.

Evidence from the CIPD’s Labour Market Outlook surveys suggests that some employers have adopted this strategy. The summer 2012 survey found that 31%ofprivatesectoremployershadmaintainedstaffing levels higher than required to meet current output and service delivery requirements. The main reasongivenfordoingthis(reportedby62%ofemployers) was to maintain the skills base within the organisation.Thesamesurveyfoundthat32%ofemployers had reduced working hours for some staff in the five years preceding the survey and only one infive(18%)hadrestoredworkinghourstopre-recession levels for all staff affected.

There is also some support from the economic statistics. While total hours worked have now surpassed their pre-recession 2008 peak, output is still lower, meaning that average labour productivity has fallen. Although there are other explanations for a fall in labour productivity, it is consistent with a degree of labour hoarding.

Organisations looking to maintain employment levels or take on extra workers have been helped by continued moderation of labour costs. Year-on-year growth in average weekly earnings in the three monthstoOctober2012was1.8%.Itisnowoverthree years since earnings growth last exceeded price inflation. The implied reduction in household purchasing power helps to explain why domestic demand has failed to stimulate economic growth. But falling real earnings also make it easier for employers to create new jobs and avoid job losses.

Another potential explanation is through expansions inlaboursupplyandjobsearchactivity.Morepeople looking for work – or looking for work more effectively – should, other things being equal, lead to greater numbers in employment, although this may have the effect of restraining growth in earnings among those in work.

One potential source of additional labour supply might have been lone parents with older children and other people claiming out-of-work benefits. Changes to the rules governing eligibility for benefits appear to have led to a noticeable increase, of about 30,000, in the number of lone parents claiming Job Seekers Allowance during 2012. These lone parents will be subject to the job search requirements of JSA and in some cases this might have led to them finding work.

The last year has also seen increases in employment among older age groups. At August–October 2012, the number of people over 50 in employment had increased over the previous year by 238,000. This change is not purely due to increased numbers of people in these age groups: employment rates increased for both 50–64-year-olds and those aged 65 and over. Financial pressures, such as much lower annuity rates for occupational pensions, may in some cases have been a factor encouraging older people to stay in employment or work for themselves.

Noneofthesepotentialexplanationsindependentlyprovides a complete explanation for the growth in employment in 2012. However, in combination, they provide at least a partial account. Falling real earnings has enabled organisations to preserve employment and create new jobs, even if some of these are on a part-time or temporary basis.


Prospects for 2013The latest OBR forecast released with the 2012 Autumn Statement foresees another year of weak economic growth in the UK, set against a backdrop of continued international turbulence. In particular, both the OBR and the OECD now expect output in the eurozone to fall again in 2013 (see Figure 2). It is difficult to see a speedy resolution of the eurozone’s problems, given German elections in the autumn of 2013. Anticipated fiscal tightening in the USA will have an impact on demand there and there are some signs of growth slowing down in emerging markets. Weakness in the eurozone is again expected to have an adverse effect on the UK’s trade performance. However, the OBR does expect growth to pick up during2013,withoutputgrowthof1.2%.There are clearly risks to even this modest growth forecast. A renewed crisis in one of the weaker eurozone economies, for example, or a more drastic

fiscal tightening in the USA than assumed by the OBR,wouldmakeeven1.2%growthastruggle.

In terms of the labour market, the OBR forecast total employment remaining flat at 29.6 million between the third quarter of 2012 (the latest actual data) and the fourth quarter of 2013. As a result, the OBR forecast an increase in unemployment by 100,000, withtheunemploymentratepeakingat8.3%towards the end of 2013.

It is important to note that this employment forecast – several quarters of flat employment – is very similar to that produced by the OBR a year ago. That forecasts failed to anticipate employment growth of 500,000. Is it possible that employment in 2013 could again defy expectations and continue to increase?

Some of the factors that might have contributed to jobs growth in 2012 are likely to remain in play in 2013. We can expect continued efforts on the

Figure 2: OECD growth forecasts for 2013

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A barometer of HR trends and prospects 2013

www.cipd.co.uk/labourmarketoutlook

Overview of CIPD surveys 24

part of Jobcentre Plus to strengthen labour market attachment among those currently claiming out-of-work benefits. Average earnings are forecast to increaseby2.2%,lessthantheforecastincreaseinpriceinflation(2.8%),making2013thefourthcalendar year in a row when average earnings will have fallen in real terms. So employers are unlikely to face significant labour cost pressures.

On the other hand, if confidence about future growth does not improve, employers that have tried to maintain employment levels and their skills base may reach a point where they feel reductions in the workforce can no longer be avoided. The summer 2012 Labour Market Outlook found that, of the 31%ofprivatesectoremployerswhosaidtheyhadstaffing levels higher than required to meet current requirements,64%saidtheywerelikelyorverylikelytocut back on excess labour if demand did not recover.This makes it difficult to predict whether the jobs growth of 2012 is permanent or whether it will unwind.Muchwilldependonbusinessconfidence.Forward-looking indicators of hiring indications, such as recruitment agency surveys, in most cases remain positive. So 2013 could see continued recruitment leading to some further increase in employment – and hence an increase in employment above OBR forecasts – even if some private sector organisations are adjusting their staffing levels downwards. But this could be accompanied by a continued squeeze on real wages.

Alongside the overall numbers, however, a factor that might characterise the labour market in 2013 is a sense of caution and nervousness on the part of both employers and workers.

Manyemployersarelikelytobecautiousaboutexpanding their workforce until they are convinced that the economy is on a path to sustained growth. Until then, a focus on keeping labour costs under control and retaining flexibility through the use of temporaryworkersand/orvariablehoursmightbeacommon strategy.

Those in work might be relieved to have a job but an increasing proportion of them might prefer another job that offered longer hours or greater security. Pay on average will not be keeping pace with inflation. However, even those dissatisfied with their current situation might still prefer to ‘sit tight’ in their current employment until the jobs market shows clear signs of improvement.

Beyond 2013Forecasts become more uncertain the further they go into the future. The OBR’s view, shared by other forecasts, is that growth in the UK will pick up in 2013 and then accelerate over the following two years towards the UK’s trend growth rate. Hence theOBRforecasts2%growthin2014and2.3%in2015,pickinguptowards2.7%in2016.

These longer-term forecasts are slightly lower than in previous OBR forecasts. This reflects two factors. First, fiscal consolidation and reductions in public expenditure are now expected to continue throughuntilatleastfiscalyear2017–18.Second,the OBR now believes that the financial crisis and its aftermath will have a long-lasting, possibly permanent, effect on UK growth potential because businesses will find it more expensive to finance investment in a post-crisis world.

For more information on the Labour market outlook survey, visit

http://www.cipd.co.uk/labourmarketoutlook

Issued: December 2012 Reference: 6086 © Chartered Institute of Personnel and Development 2012

Chartered Institute of Personnel and Development151 The Broadway London SW19 1JQ UKTel:+44(0)2086126200Fax:+44(0)2086126201Email: [email protected] Website: cipd.co.uk

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