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More companies expect to create jobs than not over the next 12 months for the first time since the onset of the recession in 2008, according to a new survey by the CBI and Accenture published today (Tuesday).

On the Up, the CBI/Accenture Employment Trends Survey, covers businesses employing more than one million people between them. It found that 51% of firms expect their workforce to be larger in 12 months’ time, with private sector workforces anticipated to grow across all regions, with Yorkshire and Humberside and the east midlands the most buoyant. Encouragingly, there are also an increasing number of opportunities for young people to find work, with companies planning to take on more graduates and apprentices.

The survey also reveals a continued cautious approach to pay, and underlines the vital role played by flexible contracts in underpinning growth and job creation.

Katja Hall, CBI Chief Policy Director, said: “We’re starting to see the recovery have an impact on business plans to hire, with more than half of firms boosting staff numbers next year and more opportunities for young people.

“It’s good to see jobs being created across most regions, not just London and the south-east. Our labour market performed well throughout the recession and pay caution and flexible contracts will continue to underpin growth.

“For the UK to remain an attractive place to do business, as the recovery takes hold, wage growth must go hand-in-hand with growth in productivity.”

Highlights of the 2013 survey’s findings include:

  • Jobs for permanent staff are increasing more rapidly than temporary posts, with a balance of +18% (35% plan higher recruitment and 17% lower) of firms planning to raise permanent hires and +14% their temporary workforce (29% higher, 15% lower)
  • Graduate job prospects are picking up with +20% of organisations planning to increase their graduate in-take in the next 12 months (33% plan to increase with 13% reducing)
  • Firms are rapidly growing their apprentice numbers (+34%) and four in five firms (81%) expect new job opportunities to open up for young people in the coming year.

Olly Benzecry, managing director for Accenture in the UK and Ireland: “The news that firms are expecting to grow their workforces is another welcome sign of the UK’s economic recovery. The skills agenda is critical to not only sustain this growth but to make it inclusive, increasing employability and opportunities for young people who are not in a job, training or education.

“UK businesses clearly recognise the value of closer collaboration with education and the need for more vocational training and apprenticeships, and this is starting to translate into action through initiatives such as Movement to Work. Even so, there is much to be done if the UK is to remain competitive in the global economy, attract investment and tackle the challenge of youth unemployment.”

Pay

Businesses continue to take a cautious approach to pay rises with more than a third (39%) planning a rise below Retail Price Index (RPI) inflation or targeting an increase on certain staff only, while only 7% intend to raise pay by more than RPI. 42% expect pay to increase in line with RPI inflation, which suggests pay growth will start to rise again over the next year, but not to high levels. As the recovery becomes more secure, the proportion of firms planning to freeze pay at the next review has dropped to a new low (8%).

Firms have rejected the idea of a mandatory wage higher than the National Minimum Wage, with 42% saying wages can only rise in line with productivity gains, for instance through higher skills. On the living wage 43% say it is useful as a voluntary reference point. Only 12% of firms said there should be any legal obligation to the living wage.

Flexible employment at the heart of job creation in the UK

Almost all firms (97%) see flexible employment patterns, such as use of agency workers and zero-hour contracts, as either vital or important to the UK economy. Respondents said that they enable companies to cope with fluctuating demand (87%), respond rapidly to growth opportunities (81%) and provide a stepping stone into work for those vulnerable to long-term unemployment (58%), as well as offering choice to those who don’t want full-time work (65%).

Businesses view the biggest current threats to flexibility and UK labour market competitiveness from the burden of employment regulation (68%). If the UK were to lose its Working Time opt-out, nearly four-fifths (79%) say it would have a negative impact, with 51% stating that impact would be severe or significant.

Katja Hall added: “The minimum wage successfully acts as a floor on pay, protecting workers while ensuring jobs can continue to be created. The living wage can only remain an aspiration that helps some firms pay more, but it must remain voluntary. Moving to a statutory approach would undoubtedly hit jobs and opportunity.

“Most businesses believe that flexible employment patterns, including agency and zero-hours work, are a critical tool when demand fluctuates and a firm needs to react quickly. These contracts create opportunities for people looking for work that might not otherwise exist, and also attract investment to the UK.”