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Ninety-two per cent of businesses have limited capacity to take on more work and employers are competing to attract and retain the people they need, according to the latest JobsOutlook survey by the Recruitment and Employment Confederation (REC).

More than four in five employers (84 percent) plan to increase their permanent workforce in the next three months and almost all (99 percent) expect to retain or increase their agency workforce in the short term. Half of the employers surveyed (49 percent) have introduced pay rises in the last 12 months in an effort to keep hold of staff.

“Skilled people are at a premium and organisations across the economy are having to pay more to attract and retain staff,” commented REC chief executive Kevin Green. “This might be a viable strategy for private sector businesses, but pay rises in the public sector have been capped at 1 per cent. This is one of the reasons we are seeing hospitals and schools struggle to attract the people they need. Recruiters may find it difficult to meet increasing demand from the public sector because people aren’t willing to take roles for the salaries being offered.

Ahead of new restrictions on pay for agency staff in the NHS which are due to come into effect on Monday, the REC has also published a separate report on demand for staff in the public sector conducted in partnership with The Smith Institute. Four in five recruiters (79 percent) supplying temporary workers to the public sector expect demand to increase in the future. However, fewer than three in five (58 percent) expect to supply more workers, suggesting that the shortage of candidates for roles in healthcare and education especially could inhibit recruiters from meeting demand.

Asked about potential solutions to this issue, recruiters said that the government must train more people to work as teachers and nurses, make the public sector more attractive to jobseekers by improving pay and conditions, and improve workforce planning.