One half of British businesses are planning to expand their workforce in 2015, with jobs projected to be created in all UK regions, and permanent jobs outstripping temporary work. That’s according to a new survey conducted by the CBI and Accenture published today (Monday 22nd December 2014).
But concerns over skills gaps that could prevent some of those jobs being filled are seen as the biggest workforce threat to UK competitiveness; and worries about new regulation damaging job creation in the UK’s flexible labour market are a close second.
The CBI/Accenture Employment Trends Survey 2014, covers 323 businesses employing a combined total of more than 1.25 million people. The survey found that 50% of firms expect their workforce to grow in number over the next year. Jobs growth is expected in every region of the UK, with Scotland leading the way. Also, job prospects for young people have improved on last year with many firms planning to recruit graduates and apprentices in 2015.
Additionally, the survey reveals that pay rises are anticipated in 2015, though at a cautious rate, reflecting weak productivity and competitive pressures. The research underlines also the vital role played by the UK’s flexible labour market in underpinning growth and job creation, which the CBI is urging the next Parliament to preserve.
Katja Hall, CBI Deputy Director-General, said:
“Businesses are planning to create jobs in every region of the UK next year as the recovery continues, and more and more of those jobs will be permanent. The outlook for young people is also looking brighter as firms look to boost their graduate in-take and expand apprenticeships.
“We want to see everyone enjoy the rewards of the economic recovery. Growth should work for everyone, and skills are the key route to ensuring that this happens through improved productivity and pay.
“It’s a concern that the UK’s growing skills gap is now seen as the number one workforce threat to the long-term health of its economy. Companies and the Government need to work together to find ways to develop skills within the workforce and help employees move into higher skilled and better paid jobs.
“Those in regular work through the year saw wages rise this year and this trend will continue in 2015. Overall, for those in regular work, wage increases have broadly kept pace with inflation, although those with more broken employment histories have seen little respite.”
Highlights of the 2014 survey’s findings include:
- 50% of firms plan to increase their workforce in 2015, with only 12% planning to reduce it, giving a positive balance of +38%
- Job growth is expected across all parts of the UK: a positive balance of +50% in Scotland; +49% in the North West; +45% in Wales; +44% in the West Midlands; +44% in the North East; +44% in the South East; +43% in London; 43% in the East Midlands; +42% in Yorkshire and Humber; +41% in the East of England; +37% in the South West and +36% in Northern Ireland
- Jobs for permanent staff are increasing more rapidly than temporary posts, with a balance of +28% (40% plan higher recruitment and 12% lower) of firms planning to raise permanent hires and +16% their temporary workforce (30% higher, 14% lower). Last year the balance of permanent posts was +18%. Again, this is across all parts of the UK
- Low level of skills (63%), closely followed by the burden of employment regulation (61%) are seen as the greatest workforce threats to UK competitiveness – respondents believe this will still be the case in five years’ time (54%). In 2013, 68% of firms cited the burden of employment regulation as the biggest threat, 65% highlighted skill levels
- Graduate job prospects are picking up with +30% of organisations planning to increase their graduate in-take in the next 12 months (36% plan to increase and 6% reduce levels – last year the balance was +20%). Openings for apprentices are also increasing with a balance of +33% looking to recruit more in 2015
- The need to invest in the digital literacy of the workforce is a growing priority for business. Of those businesses planning on investing in digital over the coming year 92% of firms recognise digital literacy and skills as a driver for efficiency.
Olly Benzecry, managing director for Accenture in the UK and Ireland, said:
“The positive outlook on jobs growth revealed in this survey is a welcome sign of the UK’s economic recovery. However we must make sure we have workers with the skills required to drive the UK’s competitiveness, and this requires a comprehensive approach to skills development.
“The collaboration between government, education and business on the skills agenda alongside the investments being made in higher level apprenticeships are improving employment prospects for young people, while those companies investing in the digital literacy of their employees will be well-placed to capitalise on the rapid digitisation of the UK economy.”
Looking at the results on pay in more detail, the survey found that pay freezes are continuing to thaw:
- 43% of firms are planning a pay rise in line with the Retail Price Index (RPI). There has been a small increase in the proportion of companies expecting to pay above RPI when compared with last year’s survey – 12% in 2014 compared to 7% in 2013. Competitive pressures and weak productivity continue to hold down pay increases – containing labour costs is one of the top three workforce priorities next year
- Three quarters (74%) of respondents think that an independent Low Pay Commission should continue to take an evidence-based approach to setting the National Minimum Wage without causing unemployment
- Less than one in five firms (19%) believe the Living Wage should be mandatory, with the remainder stating it should either remain voluntary (37%), or that the focus should be on upskilling people into better paid jobs in the workplace (40%).
Flexible labour market is crucial to the UK’s promising job figures
Almost all firms responding to the survey (95%) see the UK’s flexible labour market, as either vital or important to the UK economy. In fact, on no other single issue was there such a near unanimous response. The survey highlights a belief that this flexible labour market enables companies to respond rapidly to growth opportunities (82%) and cope with fluctuating demand (81%).
Businesses are facing the risk of significant additional costs from tribunal cases challenging the normal calculation of holiday pay. With the final details of the consequences of the recent verdict from the Employment Appeal Tribunal outstanding, 80% of firms fear a negative impact.
Katja Hall added:
“Unstitching the fabric of the UK’s flexible labour market would risk piling new costs onto businesses and ultimately put jobs at risk, so politicians must take care. As the survey shows, the UK’s flexibility makes it attractive as a place to create jobs and it has been crucial to the recovery, allowing firms to hire quickly or tailor their staff levels to meet customer needs.
“In areas such as agency work and other flexible forms of employment, politicians of all shades need to appreciate the jobs and opportunity that these approaches bring.
“Business is also clear that the minimum wage must be a clear and enforced legal base on pay, with the decision on its level made by the independent Low Pay Commission (LPC) to ensure it is free of political meddling and led by the evidence. In this way, the LPC can ensure wages rises as fast as possible without a negative impact on jobs. The living wage should be voluntary, as many firms simply cannot afford it.”
The CBI’s recent report, A Better Off Britain, identified better routes to progress in work. It recommended a greater emphasis on new middle skills, focussing on vocational routes to higher skills and not just degrees. It also called on businesses to make board-level commitments to helping employees develop their careers and incentivising line managers to make this a priority.