UK Firms Plan Hiring Spree But Growth Fails to Boost Pay

UK firms intend to go on hiring sprees this year with recruitment estimated to reach a six and a half year high, but the employment surge is yet to feed through to wage hikes.

According to research from the Chartered Institute of Personnel and Development (CIPD), there is "little evidence" that the country's buoyant jobs market is feeding through into recruitment difficulties for the majority of employers in the short term.

The organisation's Spring 2014 Labour Market Outlook net employment index increased to +26 from +16 since the Winter 2013/14 report – representing the highest score since autumn 2007.

But the research also revealed that median pay expectations, excluding bonuses, are unchanged at 2% – above the current rate of Consumer Price Index (CPI) inflation of 1.6%.

"The UK jobs market looks set to continue its remarkable post-recession performance," said Gerwyn Davies, labour market adviser at the CIPD.

"However, while skills shortages are still relatively concentrated in particular sectors and, occupations in the domestic labour market and pay continues to perform well below pre-recession levels, there is a danger that this may change if the labour market continues to tighten."

The study also found that just two in five employers report that they currently have vacancies that are hard to fill.

The CIPD said recruitment difficulties are higher in the public sector than in the private sector and employers report that the majority of vacancies they find hard to fill are highly skilled or skilled (71%).

Engineering roles are the hardest to fill, followed closely by management and executive roles, and the most common reason for difficulties filling vacancies is a lack of technical or job specific skills.

But more organisations plan to invest in their talent pipeline than in previous years, with around three in ten (31%) employers that currently have hard to fill vacancies intending to hire more UK graduates, around one in five (22%) planning to hire more apprentices and half (50%) of such employers planning to up-skill existing staff in the next two years.

The findings come ahead of the Office for National Statistics' (ONS) Labour Market Report release on 14 May.

The UK's unemployment rate was 6.9% in the three months to February, with more than 30.2 million people in work.

Economists expect the jobless rate to fall to 6.8% as the country's economic growth translates into higher employment.