Businesses to create jobs in 2018 despite uncertainty

Companies remain optimistic about their ability to generate jobs in the short-term, building on the UK’s record labour market performance, according to the latest CBI/Pertemps network group employment trends survey.

The annual survey – in its twentieth year, with 299 respondents employing around 1 million people – found that 51 per cent of firms across the UK will grow their workforce in the year ahead, with confidence highest amongst small and mid-sized firms (58 per cent).  And 93 per cent of respondents reported that a diverse and inclusive workforce is important to the future success of their organisation – up on 76 per cent in 2016.

But the survey, carried out between August and October 2017, warns that delivering further jobs growth depends on businesses being confident they can remain competitive if they choose to base staff in the UK.  Nearly two thirds (63per cent) currently believe that changes in the UK labour market will contribute to Britain becoming a less attractive place to invest and do business over the next five years – up from 50per cent last year and 25per cent in 2015.

Skills gaps were found to be the single most prominent worry facing firms, with nearly four in five (79per cent) respondents highlighting this as a concern – up from 64per cent in 2016. Access to overseas workers is a big contributor to this, with nearly half of respondents (49per cent) identifying uncertain access to labour supply – up from 35per cent in 2016.

Neil Carberry, CBI Managing Director for People policy, said:

“Britain’s record on job creation is second to none, and this year’s survey shows that this is set to continue in 2018. But with softening economic growth matched with high employment, the survey again emphasises the vital need to make progress on the Industrial Strategy and secure a good Brexit deal to improve productivity, support job creation and boost pay growth.

“The survey also shows that firms are concerned about finding the right staff in the future and this is damaging the outlook for investment in the longer term. It’s essential that businesses work to address skills gaps with colleges and other providers – but with high employment rates, domestic training alone can’t meet all our needs. Firms will need to be able to access people from outside the UK to support future growth and deliver the Industrial Strategy.

“With businesses already worried about future access to skills and labour, the worst thing we could do would be to undermine the many EU nationals already here and contributing to our businesses and public services. Last week’s Brexit deal is a good outcome if a final deal is reached, but the Government must be clear that the position of EU nationals already in the UK is secure in all scenarios.”

The survey shows that companies continue to match inflation pay awards where they can.  

52per cent of respondents aim to raise pay for their employees in line with (or above) inflation in the coming year, which is lower than the 57per cent that planned to do so in 2016. The drop is small, however, relative to the significantly higher rate of inflation that firms face – suggesting that predictions of a moderate increase in the average rate of nominal pay growth in 2018 are accurate.

An increasing proportion of firms surveyed are now affected by the National Living Wage (NLW) as the rate increases faster than average earnings. 55 per cent are now affected, compared to 50 per cent last year. Our survey shows that it is increasingly challenging for businesses, with 63 per cent are needing to take action to cope with the costs so far, up from 59 per cent in 2016. The most common actions taken range from raising prices (21 per cent) and restructuring their business model (20 per cent), to increasing investment in training (32 per cent).

As the NLW increases in the years ahead, only 28 per cent of affected businesses polled will be able to absorb the costs.  A quarter of respondents affected are expecting to restructure their business models, which raises to 33 per cent amongst mid-sized firms.  While 30 per cent intend to increase automation to raise productivity.

Businesses are more committed than ever to creating a fair and engaging workplace.

The survey shows firms see this as of benefit to them and their staff. 71 per cent of businesses report co-operative employee relations and (72 per cent) expect this to continue next year. The survey shows only one in 20 firms see relations as adversarial – with making further improvements to employee engagement scoring as companies’ top internal priority next year. Improving line management is the clear top choice for doing this, according to firms.

Improving inclusion is a key aspect of improving fairness. More than nine in ten respondents (93 per cent) reported that a diverse and inclusive workforce is important to the future success of their organisation, with 70 per cent introducing or extending flexible working opportunities and 66 per cent investing in training for line managers to help boost inclusion. Respondents report a range of benefits of inclusive workplace practices including increased skills (50 per cent) and attraction and retention of staff (52 per cent).

Tracy Evans, Pertemps Network Group HR and Quality Director, said:

“As an advocate for diversity in the workplace, I’m happy to see inclusivity is at the top of most business agendas, with many seeing introducing flexible opportunities key to future success. Addressing gender pay gaps is also integral to attracting and retaining staff and is paramount for sustainable growth. As a diversity leader, Pertemps actively works with partners to ensure they are not excluding potentially important talent. Increasing awareness in the workplace of diversity and inclusion is vital for businesses to move forward and I believe 2018 will be a promising year for improving fairness in workforces across the country.

 


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