The quarterly CIPD Labour Market Outlook report has indicated that UK based employers continue to face a shortage of workers with the net employment balance being driven to near all-time high levels lead by the private sector. The high demand for talent against the low supply has prompted many employers to raise pay and offer more flexible benefits in order to boost recruitment and retention efforts.
Almost half of employers surveyed indicated that they continue to face problems when it comes to recruiting talent for hard-to-fill vacancies. Healthcare remains the most impacted industry with 64% of businesses in this sector reporting difficulty in attracting staff. Employers across the board indicated that retaining their workers as a critical issue for them with 41% of respondents reporting an increase in staff turnover or difficulty in retaining employees.
In order to ward off rising attrition, many UK based businesses expect to provide a 3% pay increase to staff—the highest level of basic pay increase since the report began. However, despite the pay raise, many UK workers are facing a real-terms pay cut in 2022 as inflation is far outpacing wage growth. Additionally, far fewer workplaces (6%) has plans to reduce staff levels over the next quarter, indicating that retention is becoming as important as recruitment to manage the workforce.
As a result, employers are looking beyond traditional pay-based rewards to deal with these issues. Employers are turning to upskilling their existing staff rather than relying on external talent along with making jobs more flexible and improving employee wellbeing.
The report notes that though improving people management practices may help mitigate the challenges of a tight labour market, the UK Government must also tackle issues head-on particularly in areas relating to levies to ensure flexible, cost-effective training for staff.
Paul Arkwright
Publisher
