Hard-to-fill vacancies push average expected pay rises to new record of 5%
THE latest quarterly Labour Market Outlook (LMO) report from the Chartered Institute of Personnel & Development (CIPD) has found that employers are expecting average pay rises to reach 5%.
Covering January to March, the report is a snapshot of employer expectations for the months ahead and provides forward-looking labour market data and analysis on recruitment, redundancy and pay intentions.
Expected pay awards have risen to 5% overall, the highest level since tracking began in 2012. However, anticipated public sector pay rise expectations of 2% lag behind those in the private sector. This gap provides some key context for the ongoing discontent and strikes amongst public sector workers.
The report also found that further pay rises could be in store later this year, with 55% of employers saying they expect to raise pay further in 2023 to help with recruiting and retaining staff. This isn’t surprising given that UK employer hiring confidence remains strong, combined with high reported levels of hard-to-fill vacancies.
The CIPD surveyed 2,012 employers and found that seven in ten expect to hire new staff in the next three months and anticipated redundancies remain below pre-pandemic levels. However, despite strong hiring intentions, more than half of employers said they have hard-to-fill vacancies and many of those surveyed expect this to continue.
Of those organisations that have already or plan to raise pay in response to hard-to-fill vacancies, more aim to achieve this by raising prices rather than lowering profits and absorbing costs. Interestingly, the opposite was true 12 months ago which suggests the tight labour market will increasingly feed through into price rises over the coming months.
Employers are upskilling existing staff (47%), raising wages (43%), increasing the duties of existing staff (36%), improving job quality (27%) and hiring more apprentices (26%) to address their hard-to-fill vacancies. It is also worth noting that increasing the duties of existing staff is more prevalent in sectors which are seeing industrial action such as education (43%) and healthcare (40%).
The report also suggests that employers appear to be more receptive to hiring people who are returning to work after having time out of the labour market, for reasons other than having a child, such as other caring responsibilities or a health condition. This is an important development given the increase in inactivity due to health conditions, of which long Covid is playing a part.
Leeann Panglea, Head of CIPD in Northern Ireland said: “It is positive to see many employers taking steps to tackle skills shortages by upskilling existing staff and hiring apprentices.
“Employers are also looking to expand their usual talent pools to fill vacancies – trying to reach older workers, carers and those with health conditions – but this also requires a focus on improving job quality, particularly flexibility.
“The forthcoming introduction of a day one right to request flexible working in GB by the UK Government will not automatically transfer to Northern Ireland. However, employers should ensure that they advertise jobs as flexible and provide a range of flexible working practices to attract and retain a more diverse workforce.”
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