Vale & West Chartered Accountants Blog

Labour market outlook buoyant but salaries remain stagnant

A recent report suggests that despite ‘challenges’ in recruitment and retention, the jobs market is continuing to boom, although a significant number of salaries remain stagnant.

The Chartered Institute for Personnel Development’s (CIPD) latest Labour Market Outlook report states that employers have been able to shake off uncertainty over Brexit and are continuing their hiring spree.

Moreover, official figures released last month by the Office for National Statistics (ONS) showed that the number of people working in the UK had reached its highest level since 1971, hitting 32.7 million. Meanwhile, unemployment fell to 1.34 million, which was the lowest level since 1975. However, this confidence has yet to translate into significant salary increases.

According to the report, the net employment balance, which is the difference between the proportion of employers who expect to hire and those who expect to lay staff off, went up from +20 to +22 over the previous quarter, with confidence highest in the business services, construction, healthcare and technology sectors.

Despite this, basic pay expectation in the 12 months to March next year held steady at two per cent, even though recruitment and retention difficulties were a key factor for most employers.

However, more than half of the employers polled said they had increased starting salaries for at least a minority of vacancies, and more than a quarter increased salaries for the majority of vacancies.

The report found that skills shortages are a particular problem in professional occupations, with 50 per cent of employers saying that applicants do not have the required level of skills they need. In response to this, 43 per cent said they are upskilling existing staff to offset hard-to-fill vacancies, and 19 per cent are recruiting from outside the UK.

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