labour market outlook - cipd · digital platforms, such as glassdoor and linkedin, allow employees...

19
in partnership with OUTLOOK VIEWS FROM EMPLOYERS LABOUR MARKET Spring 2019

Upload: others

Post on 26-Jul-2020

0 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

in partnership with

OUTLOOKVIEWS FROM EMPLOYERS

LABOURMARKET

Spring 2019

Page 2: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

The CIPD is the professional body for HR and people development. The not-for-profit organisation champions better work and working lives and has been setting the benchmark for excellence in people and organisation development for more than 100 years. It has 150,000 members across the world, provides thought leadership through independent research on the world of work, and offers professional training and accreditation for those working in HR and learning and development.

Page 3: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

1

Labour Market Outlook Spring 2019

Contents 1 Foreword from the Adecco Group UK and Ireland 2

2 Executive summary 3

3 Recruitment and redundancy outlook 4

4 Job vacancies 7

5 Pay outlook 12

6 Survey method 15

Report

Labour Market Outlook Spring 2019

Page 4: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

2

Labour Market Outlook Spring 2019

1 Foreword from the Adecco Group UK and Ireland

The Adecco Group has highlighted a skills-short market for some time. It is typically a difficult thing to quantify, but this latest Labour Market Outlook shines a strong light on the areas that businesses are struggling in.

It might be expected that businesses would struggle most with hiring senior candidates, those with the rarest, most valuable of skill sets, but the report shows that’s not the case. In fact, more businesses are struggling to acquire quality entry-level talent than senior executives.

UK businesses seem to be most struggling with acquiring quality, experienced professionals with technical skills. This makes sense as these are the skills it’s hardest to do without – you can’t be a lawyer without knowledge of the law.

The most common response from the survey to tackling these recruitment challenges was upskilling existing employees; but conversations about upskilling should also be part of the recruitment process.

Candidates increasingly understand that it is their responsibility to mould their own careers, set their own goals and build their own skill sets to achieve upskilling. In the Adecco Group’s recent Future-Proofing the Workforce report, 62% of respondents said that they were most responsible for the acquisition of new skills compared to just 22% who said employers were.

Successful internal training and promotion schemes can be highly valuable tools for attracting talent at all levels of business. Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed doors.

UK employers should take advantage of this drive and interest in upskilling by creating internal pipelines of talent.

Increasing the salary package on offer to fill a job quickly is a perfectly acceptable short-term fix to skills shortages, but successful businesses need long-term solutions to flourish.

Alex Fleming, Country Head and President of Staffing and Solutions, the Adecco Group UK and Ireland

1 Foreword from the Adecco Group UK and Ireland

Page 5: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

3

Labour Market Outlook Spring 2019Labour Market Outlook Spring 2019

2 Executive summaryThe quarterly CIPD Labour Market Outlook (LMO) provides a set of forward-looking labour market indicators, highlighting employers’ recruitment, redundancy and pay intentions. The survey is based on responses from 2,182 employers.

Labour demandAccording to the survey data in this report, the recent strong growth in employment looks set to continue in the short term. The net employment balance1 for Q2 2019 is +22, which is broadly consistent with previous quarters. Across industries, employment growth expectations are broad-based but are highest in business services (+38), construction (+36), healthcare (+31) and ICT (31%). Buoyant demand continues to cause recruitment and retention difficulties for many employers. Around two-fifths (41%) of employers say that it has become more difficult to fill vacancies during the past year. Meanwhile, around a third (33%) of employers say that it has become harder to retain staff.

Upskilling remains at the forefront of employers’ responses to such difficulties. More than two in five (43%) employers say that they are upskilling existing employees to fill hard-to-recruit-for positions. Other popular responses to attract staff include improving the pay and benefits package and hiring more apprentices.

The latest official data from the Office for National Statistics (ONS) also suggests that employers are looking to broaden their approach to recruiting staff in light of a tightening labour market. It shows that employers have hired a relatively large proportion of older workers, women returners and people with disabilities during the past year. This is fairly consistent with the survey data in this report, which suggests that a small proportion are hiring more older workers and more people from disadvantaged groups and lowering recruitment standards in response to such difficulties (Figure 9).

Another feature about the composition of employment growth during the past year is that the vast majority of the additional jobs have been skilled, full-time and permanent, which could mean that employers are needing to offer more secure employment opportunities to attract staff as the competition for workers continues to grow.

Wages and salariesDespite rising recruitment and retention pressures, median basic pay expectations in the 12 months to March 2020 remain at 2%, which is consistent with recent LMO reports. However, expectations have fallen back in the private sector from 2.5% to 2% since the previous report. At the same time, basic pay expectations have risen in the public sector from 1% to 1.5%.

The LMO pay indicator has diverged somewhat from the latest official average weekly earnings (AWE) measure, which shows that earnings (excluding bonuses) have increased by 3.4% over the past year. This can be partly explained by the limitation of basic pay settlements to capture the extent to which employers are offering higher pay to some key or new staff. As the survey data in this report indicates, of those employers reporting recruitment difficulties, over half of establishments have increased starting salaries. Yet, employers are almost as likely to say that they have raised salaries for the minority of vacancies only as they are to report a more generous offering for the majority of workers.

2 Executive summary

1 The net employment balance is an indicator of employment confidence. It takes the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff levels.

Page 6: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

4

Labour Market Outlook Spring 2019

3 Recruitment and redundancy outlook

Employers report a very similar approach to reward in terms of retaining staff, which means that while some workers may be benefiting from a pay dividend as a result of the tightening job market, many will not.

Another factor behind rising average earnings is the composition of employment growth during the past year, which has been drawn from medium-skilled or high-skilled occupations according to official statistics.2

The results thus suggest that the recent strengthening in pay growth looks set to stall, unless the UK’s productivity growth begins to strengthen appreciably.

3 Recruitment and redundancy outlook

What is the short-term employment outlook?This section focuses on the recruitment and redundancy intentions of LMO employers in the second quarter of 2019. This latest report suggests that employment confidence remains high compared with the measure’s historical average (Figure 1). This quarter’s net employment balance has increased from +20 to +22 (Figure 1).

How to interpret Figure 1The red line represents the LMO net employment outlook, which indicates how employers feel employment levels will change over the next three months. The purple line represents the ONS quarterly change in employees to show what actually happened to the number of employees in the labour market.

Base: Spring 2019, all employers (n=2,182).

–2.9

–1.9

–0.9

0.1

1.1

2.1

% c

hang

e in

num

ber

of e

mpl

oyee

s on

pre

viou

s qu

arte

r

LMO

net

em

ploy

men

t ba

lanc

e

Jan–

Mar 20

14

Apr–Jun

2014

Jul–S

ep 20

14

Oct–Dec

2014

Jan–

Mar 20

15

Figure 1: Relationship between quarterly increase in number of employees (Labour Force Survey) and Labour Market Outlook net employment balance projection

Apr–Jun

2015

Jul–S

ep 20

15

Oct–Dec

2015

Jan–

Mar 20

16

Apr–Jun

2016

Jul–S

ep 20

16

Oct–Dec

2016

Jan–

Mar 20

17

Apr–Jun

2017

Jul–S

ep 20

17

Oct–Dec

2017

Jan–

Mar 20

18

Apr–Jun

2018

Jul–S

ep 20

18

Oct–Dec

2018

Jan–

Mar 20

19

April–Ju

n 2019

% change in number of employees on previous quarter (left axis)

%

LMO net employment balance (right axis)

18

16 16 16 16 16

26

23 22 22

30

25

2020

15

10

5

0

15 14

21 20 20

19

1918 18

17

2 www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/latest

Page 7: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

5

Labour Market Outlook Spring 2019Labour Market Outlook Spring 2019

3 Recruitment and redundancy outlook

Figure 2: Decomposition of net employment balance over time

Dec

ompo

sitio

n of

net

em

ploy

men

t ba

lanc

e (s

tack

ed b

ars)

Net

em

ploy

men

t ba

lanc

e (g

rey

line)

0

10

20

30

0

5

10

Summer

2014

Sprin

g 2014

Autum

n 2014

Wint

er 20

14–15

Sprin

g 2015

Summer

2015

Autum

n 2015

Wint

er 20

15–16

Sprin

g 2016

Summer

2016

Autum

n 2016

Wint

er 20

16–17

Sprin

g 2017

Summer

2017

Autum

n 2017

Wint

er 20

17–18

Sprin

g 2018

Summer

2018

Autum

n 2018

Wint

er 20

18–19

Sprin

g 2019

18

16

21

16 1719

19

16

20 20

1516 14

18 18

16

26

2322

20

22

Base: Spring 2019, all employers (n=2,182).

40

50

70

80

90

100

60

15

20

25

35

40

30

Don’t know

Increase total sta� level Maintain total sta� level

Quarter

Decrease total sta� level

Net employment score

The results suggest that any employment growth will continue to be driven by the private sector, which has increased from +22 to +25 since the previous quarter. In addition, employment levels look set to increase in the public sector (+8) and in the voluntary sector (+26) during the same period (Figure 3).

Base: Spring 2019, all employers (total n=2,182; private n=1,659; public n=328; voluntary n=195).

–25

–20

–10

–15

–5

15

20

0

Net

em

ploy

men

t ba

lanc

e

5

10

25

30

35

Figure 3: Overall e�ect of increasing or decreasing sta� over the next three months, by business sector

PublicVoluntary

25

26

22

8

Summer

2014

Sprin

g 2014

Autum

n 2014

Wint

er 20

14–15

Sprin

g 2015

Summer

2015

Autum

n 2015

Wint

er 20

15–16

Sprin

g 2016

Summer

2016

Autum

n 2016

Wint

er 20

16–17

Sprin

g 2017

Summer

2017

Autum

n 2017

Wint

er 20

17–18

Sprin

g 2018

Summer

2018

Autum

n 2018

Wint

er 20

18–19

Sprin

g 2019

TotalPrivate

Quarter

Page 8: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

6

Labour Market Outlook Spring 2019

3 Recruitment and redundancy outlook

Employment confidence appears to be fairly broad-based across sectors (Figure 4). Among the LMO employers who responded to the survey, employment confidence is highest in business services (+39), construction (+36), healthcare (+31) and ICT (31%).

Figure 4: Net employment score, by sector (%)

Base: All bases > 50. For breakdown of base sizes see Table 3. Net employment score

0

11

11

16

20

20

26

28

31

31

36

39

22

23

24

Education

Public administration and other public sector

Primary and utilities

Manufacturing

Wholesale, retail and real estate

Hotels, catering and restaurants/arts, entertainment and recreation

Total

Transport and storage

Finance and insurance

Business services (for example consultancy, law,PR, marketing, scientific and technical services)

Construction

Information and communication

Healthcare

Administrative and support serviceactivities and other service activities

Voluntary

Looking across the different nations and regions of the UK (Figure 5), employment confidence is highest in Yorkshire and Humberside (+27) and the north-west of England (+26) and lowest in the East Midlands (+13) and the north-east of England (+8).

Figure 5: Net employment score, by region (%)

Base: All bases > 50. For breakdown of base sizes see Table 3.

26

23

27

22

22

19

13

8

19

17

16

Yorkshire and Humberside

North-west of England

South-east of England

Eastern England

Wales

South-west of England

London

Scotland

West Midlands

East Midlands

North-east of England

Net employment score

Page 9: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

7

Labour Market Outlook Spring 2019Labour Market Outlook Spring 2019

4 Job vacancies

4 Job vacanciesAgainst the backdrop of a buoyant demand for labour, it is no surprise that a majority of organisations who are currently hiring have hard-to-fill vacancies. Among employers who currently have vacancies in their organisation, three in five (61%) report that at least some of these vacancies are proving hard to fill. By comparison, the same proportion (61%) of employers reported that they were currently having difficulty filling vacancies in their organisation during the same period in 2018 (Figure 6). Additionally, more than two fifths (41%) of employers report that it has become more difficult to fill vacancies over the past year. Around one in twenty organisations (6%) say that it has become less difficult.

Autumn2017

Winter2017–18

Spring2018

Summer2018

Autumn2018

Winter2018–19

Spring2019

63

65

67

61

59

57

55

69

71

73

Figure 6: Proportion of organisations with current vacancies that have hard-to-fill vacancies (%)

Quarter

7170

61

66

61

6464

Prop

ortio

n of

LM

O e

mpl

oyer

s (w

ith v

acan

cies

)th

at c

urre

ntly

hav

e ha

rd-t

o-fil

l vac

anci

es

Base: Spring 2019, all employers who currently have vacancies (n=1,237).

Hard-to-fill vacancies are most prevalent in public administration and defence (74%) and healthcare (73%) and ICT (69%) (Figure 7). Looking at the broader sectors, recruitment difficulties are higher in the public sector (72%) than in the private sector (59%) and voluntary sector (49%).

Page 10: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

8

Labour Market Outlook Spring 2019

4 Job vacancies

Figure 7: Proportion of organisations with current vacancies that have hard-to-fill vacancies (%)

Base: All bases > 50. For breakdown of base sizes see Table 3.

Proportion of LMO employers (with vacancies) that currently have hard-to-fill vacancies

73

69

74

69

65

65

63

61

61

57

49

49

47

64

64

63

Healthcare

Public administration and other public sector

Information and communication

Construction

Manufacturing and construction

Hotels, catering and restaurants/arts, entertainment and recreation

Manufacturing

Primary and utilities

Education

Business services (for example consultancy, law,PR, marketing, scientific and technical services)

Transport and storage

Voluntary

Wholesale, retail and real estate

Administrative and support serviceactivities and other service activities

Finance and insurance

Total

Do you currently have any vacancies that are hard to fill?

What proportion of vacancies are hard-to-fill?On average, organisations with hard-to-fill vacancies report that nearly four in ten of their total vacancies (39%) are proving hard to fill. This is higher than the incidence of recruitment difficulties reported in the spring 2018 survey, where three in ten of all vacancies (30%) were hard to fill among those organisations that experienced recruitment difficulties.

Overall, employers whose organisations are facing hard-to-fill vacancies report that on average around two-thirds (64%) are skill shortage vacancies – vacancies which are proving difficult to fill because of the establishment not being able to find applicants with the appropriate skills, qualifications or experience.

By occupation, the incidence of skill shortage vacancies among employers is particularly prevalent among professional occupations (for example scientists, engineers, IT business analysts, and so on), where half (50%) of employers say that applicants do not have the required level of skills, qualifications or experience. Meanwhile, around three in ten establishments (28%) say they are having difficulty filling positions for associate professional and technical occupations (for example science/engineering technicians, architectural technicians, and so on).

Page 11: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

9

Labour Market Outlook Spring 2019Labour Market Outlook Spring 2019

4 Job vacancies

In addition, almost a quarter (23%) of employers report challenges recruiting managers, directors and senior officials and a similar proportion report similar difficulties for filling skilled trades vacancies (20%). Meanwhile, fewer employers report difficulties finding staff for administrative and secretarial (7%), process, plant and machine (7%) or elementary (5%) occupations. This is perhaps no surprise given that all of the employment growth during the past year has come from medium-skilled or high-skilled roles.3

% o

f LM

O e

mpl

oyer

s

40

50

60

30

20

10

0

Figure 8: Most di�cult positions to fill (%)

16

4

2731

19

49

Base: All organisations with hard-to-fill vacancies (n=757).

Level of seniority – low to high

Entry

level

(for e

xample

first

job,

traine

e/grad

uate

role,

workin

g under

superv

ision

)

Interm

ediat

e or e

xperi

ence

d leve

l

(for e

xample

role

requir

ing ex

perien

ce,

acad

emic

and/o

r pro

fessio

nal q

ualifi

catio

n)

Middle-lev

el man

agem

ent

(for e

xample

genera

l man

agers

,

region

al man

ager,

plant m

anag

er)

Senio

r, exe

cutiv

e, or

top-le

vel

manag

emen

t or c

hief e

xecu

tives

Don’t k

now

First-

level

manag

emen

t

(for e

xample

superv

isors,

team

lead

ers,

depart

ment m

anag

er)

In terms of levels of seniority, employers with hard-to-fill vacancies indicate that intermediate or experienced level roles are proving most difficult to fill (49%), followed by middle-level management (31%) and first-level management (27%) roles (Figure 8). Employers seem to be having less difficulty finding candidates with the necessary skills or experience for senior, executive, or top-level management (16%) or entry-level (19%) roles.

Organisational response to hard-to-fill vacanciesThe vast majority of organisations are currently taking steps to tackle recruitment difficulties (Figure 9). Upskilling remains at the forefront of organisations’ approaches to tackling recruitment difficulties. More than two in five (43%) employers are currently upskilling existing staff to help offset hard-to-fill vacancies. Meanwhile, almost three in ten (29%) employers are currently raising wages, while almost a quarter (23%) of employers report that they are hiring more apprentices. In addition, almost a fifth (19%) of establishments are hiring from overseas to offset their current difficulties.

3 www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/latest

Page 12: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

10

Labour Market Outlook Spring 2019

4 Job vacancies

The findings also suggest that a relatively small proportion of employers have changed their recruitment practice in response to a tightening labour market. For instance, the most recent official data suggest that more than 70% of the employment growth during the past year has come from workers aged 50 and above. This survey suggests that almost one in ten (8%) employers say they are taking on more older workers while a similar proportion (6%) say that they are targeting individuals from disadvantaged groups. Overall, around one in seven (16%) employers say that they are lowering their recruitment standards.

Figure 9: Organisation response to hard-to-fill vacancies (%)

Base: Organisations with hard-to-fill vacancies (n=757).

29

23

43

19

18

17

12

11

10

8

8

6

5

16

13

13

Improving the pay and benefits package

Upskilling existing employees to fill hard-to-recruit-for positions

Hiring more apprentices

Recruiting candidates from overseas

More investment in the brand of the organisationto attract a wider or younger set of applicants

Employing more self-employed people to fill thegap (for example freelancers and consultants)

Lowering recruitment standards (for example recruitingcandidates that don’t have the desired experience or skill level)

Hiring more UK graduates

Greater investment in labour-saving technology

Not applicable – my organisationis not undertaking any of these things

O�shoring activities

Greater e�orts to recruit from disadvantaged groups (for examplepeople with a criminal record, long-term unemployed, etc)

Other

Greater e�orts to recruit workers aged over 55

Outsourcing activities

More work experience schemes/work placements/internships

% of LMO employers

Res

pons

e to

har

d-to

-fill

vaca

ncie

s

To alleviate their recruitment difficulties, more than half of employers (53%) have increased starting salaries for at least a minority of vacancies. Over a quarter of organisations (28%) have increased salaries for the majority of vacancies in response to recruitment pressures, while a similar proportion (25%) say that they have increased wages for a minority of vacancies only. However, more than four in ten (43%) employers have still not made any increases in starting salaries. In the private sector, the proportion of employers raising starting salaries has fallen from 66% to 62% during the past three months. Meanwhile, the proportion of public sector employers that have raised starting salaries in response to recruitment difficulties continues to decline (Figure 10). A quarter of employers (25%) say that they have raised starting salaries in response to recruitment difficulties, which is down from 43% in summer 2018.

Page 13: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

11

Labour Market Outlook Spring 2019Labour Market Outlook Spring 2019

4 Job vacancies

Summer2018

Autumn2018

Winter2018–19

Spring2018

40

45

50

35

30

25

20

15

10

5

0

55

65

60

70

Figure 10: Proportion of employers raising starting salaries in response to recruitment di�culties (%)

Base: Recruitment has become more di�cult (raise starting salaries) (public n=159; private n=593).

56 56

66

62

29

43

2725

Private (increased starting salaries) Public (increased starting salaries)

How are retention pressures changing? A third of employers (33%) assert that it has become more difficult to retain staff at their organisation over the past 12 months, which is broadly consistent with previous reports. Employers in the public sector are significantly more likely than those in the private sector to report it has become more difficult to retain staff (42% compared with 32%) during the past 12 months.

Among organisations that have had increasing difficulty retaining staff over the past 12 months, over half (54%) have increased salaries in some capacity. However, almost as many employers say that they have increased salaries for key staff at the organisation (25%) as the proportion that say they have raised salaries for the majority of staff (29%) to improve retention rates.

Employers in the public sector are significantly less likely to have increased salaries than those in the private sector (33% compared with 60%) (Figure 11).

Page 14: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

12

Labour Market Outlook Spring 2019

5 Pay outlook

Summer2018

Autumn2018

Winter2018–19

Spring2018

40

45

50

35

30

25

20

55

65

60

70

15

10

5

0

Figure 11: Proportion of employers raising salaries in response to retention diculties (%)

Base: Retention has become more di�cult (raise salaries) (public n=129; private n=467).

6159

6260

32

3534 33

Private (all salaries) Public (all salaries)

5 Pay outlookWhat is likely to happen to wages in the next 12 months?Median basic pay expectations in the 12 months to March 2020 are 2%, which is consistent with recent LMO reports. However, expectations have fallen back in the private sector from 2.5% to 2% since the previous report. At the same time, basic pay expectations have risen in the public sector from 1% to 1.5% (Figure 12). Looking at the sub-sectors, median basic pay award expectations are higher in the manufacturing sector (2.4%) than in the services sector (2%).

Despite the modest fall in the share of organisations that are unable to predict their next basic pay awards, around three in ten (29%) of organisations still do not know what their next basic pay award will be, so some care should be taken not to make too much of this.

Page 15: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

13

Labour Market Outlook Spring 2019Labour Market Outlook Spring 2019

5 Pay outlook

Base: Spring 2019, all employers who report an expected increase, decrease or pay freeze in the next 12 months(total n=992; private n=703; public n=181; voluntary n=108).

Figure 12: Average predicted annual basic pay awards (median), by business sector

Sprin

g 12

Summer

12

Autum

n 12

Wint

er 12

–13

Sprin

g 13

Summer

13

Autum

n 13

Wint

er 13

–14

Sprin

g 14

Summer

14

Autum

n 14

Wint

er 14

–15

Sprin

g 15

Summer

15

Autum

n 15

Wint

er 15

–16

Sprin

g 16

Summer

16

Autum

n 16

Wint

er 16

–17

Sprin

g 17

Summer

17

Autum

n 17

Wint

er 17

–18

Wint

er 18

–19

Sprin

g 2019

Sprin

g 18

Summer

18

Autum

n 18

0.0

0.5

1.0

–0.5

2.0

2.5

1.5

Public sector

Private sector

Voluntary sector

Overall net

Pred

icte

d an

nual

bas

ic p

ay a

war

ds (

%)

2.0

1.5

% o

f LM

O e

mpl

oyer

s

40

50

60

30

20

10

0

–4.0+

Figure 13: Distribution of forward-looking basic pay settlements – spring 2019 (%)

0 00 01

12

18

13

38

18

1

–3.0–3

.99

–2.0–2

.99

–1.0–1.

99

–0.1–

0.99

Pay fr

eeze

0.1–0.99

1.0–1.

99

2.0–2

.99

3.0–3

.994.0+

Base: Spring 2019, all employers who report an expected increase, decrease or pay freeze in the next 12 months (total n=992).

Bands of pay change

Page 16: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

14

Labour Market Outlook Spring 2019

What are the key factors behind employers’ basic pay decisions? According to the survey data, inflation continues to put upward pressure on pay for some organisations. The proportion of employers that cite inflation as a reason for a basic pay award of 2% or more remains elevated (42%) compared with three months ago (44%) (see Figure 14). Meanwhile, the proportion of organisations that say that the going rate of pay elsewhere has been an influence fell from just four in ten (38%) employers to 32% of employers.

In addition, the proportion of organisations that cite recruitment and retention pressures has fallen from around one in three employers (34%) to almost three in ten employers (29%).

Among employers who predict that average basic pay will increase at their organisation by less than 2%, or not increase at all, the three most popular reasons are restraint on public sector pay (35%), affordability (35%) and uncertainty around the UK’s future access to the EU market (21%).

5 Pay outlook

Rea

sons

beh

ind

incr

ease

abo

ve 2

%

Figure 14: Top causes for increase in average basic pay by 2% or more (%)

44

32

29

26

19

14

11

7

1

Base: Spring 2019, all employers who expect their organisation’s basic pay will increase by 2% or more (n=687).

Inflation

Movement in market rates/the ‘going rate’ of pay rises elsewhere

Other labour costs, for example, the NationalLiving Wage, the apprenticeship levy,

auto-enrolment pension scheme

Recruitment and retention issues

Organisation’s ability to pay more

The ‘ripple e�ect’ of higher starting salaries

Union/sta� pressures

Other

Don’t know

% of LMO employers

Rea

sons

beh

ind

incr

ease

bel

ow 2

%

Figure 15: Top factors restricting organisations’ ability to match the inflation rate target of 2% (%)

35

35

21

18

15

8

7

7

1

Base: Spring 2019, all employers who expect their organisation’s basic pay will increase by less than 2% (n=304).

Restraint on public sector pay

Organisation’s inability to pay more

Uncertainty about future access to the EU market

To absorb labour costs, for example auto-enrolmentpension scheme, the National Living Wage,

apprenticeship levy, etcMovement in market rates/

the ‘going rate’ of pay rises elsewhere

Poor employee productivity and performance

We have no recruitment and retention issues

Other

Don’t know

% of LMO employers

Page 17: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

15

Labour Market Outlook Spring 2019Labour Market Outlook Spring 2019

6 Survey methodAll figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,182 senior HR professionals and decision-makers in the UK. Fieldwork was undertaken between 21 March and 18 April 2019. The survey was carried out online. The figures have been weighted and are representative of UK business by size, sector and industry.

Weighting Rim weighting is applied using targets on size and sector drawn from the Business Population Estimates for the UK and Regions 2016. The following tables contain unweighted counts.

6 Survey method

Table 3: Breakdown of sample, by industry

Industry Count

Voluntary 195

Manufacturing and production 371

Manufacturing 192

Construction 129

Primary and utilities 50

Education 209

Healthcare 145

Private sector services 1,127

Wholesale, retail and real estate 143

Transport and storage 58

Information and communication 134

Finance and insurance 175

Business services (eg consultancy, law, PR, marketing, scientific and technical services) 257

Hotels, catering and restaurants/Arts, entertainment and recreation 152

Administrative and support service activities and other service activities 208

Public administration and defence 135

Public administration and other public sector 120

Police and armed forces 15

Total 2,182

Table 1: Breakdown of the sample, by number of employees in organisation

Employer size band Count

2–9 449

10–49 485

50–99 181

100–249 229

250–499 170

500–999 123

1,000 or more 545

Total 2,182

Table 2: Breakdown of sample, by sector

Sector Count

Private sector 1,659

Public sector 328

Third/voluntary sector 195

Total 2,182

Page 18: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

16

Labour Market Outlook Spring 2019

6 Survey method

Table 4: Breakdown of sample, by region

Region Count

North-east of England 63

East Midlands 114

West Midlands 149

Scotland 140

London 365

South-west of England 154

Eastern England 105

Wales 62

South-east of England 304

North-west of England 167

Yorkshire and Humberside 134

Northern Ireland 18

Page 19: LABOUR MARKET OUTLOOK - CIPD · Digital platforms, such as Glassdoor and LinkedIn, allow employees to advocate for the positive things companies do that used to be hidden behind closed

Chartered Institute of Personnel and Development151 The Broadway London SW19 1JQ United Kingdom T +44 (0)20 8612 6200 F +44 (0)20 8612 6201E [email protected] W cipd.co.ukIncorporated by Royal Charter  Registered as a charity in England and Wales (1079797) Scotland (SC045154) and Ireland (20100827)

Issued: May 2019 Reference: 7864 © CIPD 2019