Skills shortages ‘casting shadow’ over blooming UK market

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British business is blooming as we approach 2016, but the growing skills gap looms large on the horizon
British business is blooming as we approach 2016, but the growing skills gap looms large on the horizon

The confidence of British business is growing and the new found fortitude is being reflected in more gutsy hiring decisions.

In a new survey 82 percent of employers said they thought economic conditions were improving and more than four in ten (43 percent) said they would approach future hiring decisions with greater confidence. The results were disclosed in the JobsOutlook survey by the Recruitment and Employment Confederation (REC).

Optimism 

An optimistic outlook caps a year of positive news for many businesses and employees. The proportion of employers reporting they have a ‘considerable’ amount of spare capacity has remained static at 0 percent throughout 2015, whilst the proportion of businesses reporting to have carried out redundancies in the preceding twelve months has fallen from nine percent at the end of 2014 to five percent at the end of the current year.

Continued growth looks set to be a key characteristic 2016, with 86 percent of employers signaling that they will take on more permanent staff in the next three months, and 78 percent say that hiring is on their agenda in the medium term.

“2015 has been a vintage year for the labour market. Employers are confident, hiring has been steady and pay has increased for many people as the benefits of economic growth filter through. The outlook for 2016 is similarly rosy, with many private sector businesses seeking to build upon a successful year by expanding their capacity to take on more work, and also by improving productivity,” commented Tom Hadley director of the REC.

Unemployment rate 

However, with unemployment at the lowest rate since January 2006 and vacancies at a record high (747,000) according to the latest ONS data, it is thought that employers may find it increasingly difficult to recruit for new roles in 2016.

The JobsOutlook report notes technical/engineering, professional/managerial, driving/distribution and construction roles will be particularly difficult to fill next year.

“Although the overall outlook is upbeat, major challenges are just around the corner,” Hadley continued. “The introduction of the National Living Wage, uncertainty around the EU referendum outcome and skills shortages that are getting worse in many industries all have the potential to knock employers off their stride.

Public sector services such as education and healthcare are already finding it extremely difficult to bring in the people they need. The challenge of ensuring that the demand for staff is met by the supply of suitably skilled candidates casts a shadow over the forecast for 2016.”

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