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The UK’s jobs outlook is at its most positive for more than six years as the country’s employment boom shows little sign of abating, a survey of 1,000 employers has found.
The findings from the Chartered Institute of Personnel and Development come in advance of Wednesday’s official labour market data, in which economists expect a further fall in the unemployment rate from 6.9 per cent to 6.8 per cent of the workforce, according to a Reuters poll.
The jobless rate has dropped rapidly from nearly 8 per cent a year ago. Employment has grown by 691,000 in the past year – the largest rise for almost a quarter of a century.
Economists also expect average earnings to have increased by 2 per cent in the first quarter of the year, compared with a year earlier – up from 1.7 per cent in the three months to February.
This means that wages are likely to have overtaken inflation for the first time in six years, apart from a bonus-related blip in 2010. Wage growth matched inflation in last month’s data, but the consumer price inflation rate has since dropped to 1.6 per cent in March.
A survey of job agencies by the Recruitment and Employment Confederation and KPMG last week showed the availability of staff to fill jobs was declining sharply and starting salaries were rising at their fastest rate since 2007.
“It appears that labour market slack is being eroded rapidly,” said Michael Saunders, an economist at Citi. He said there was “the possibility of a marked pick-up in average earnings growth in the rest of this year”, which could lead to an early interest rate rise.
The CIPD’s quarterly labour market outlook, however, points to more subdued wage growth. It said the expected median basic pay increase, excluding bonuses, remained 2 per cent in the private sector, unchanged on the last quarter, and 1 per cent in the public sector.
Some sectors were struggling to fill high-skilled vacancies, but the buoyant labour market had still to feed through into recruitment difficulties for most employers, the CIPD said.
The net employment balance – those planning to increase staff in the second quarter minus those planning to cut – rose to plus 26 from plus 16 three months ago.
Smaller employers were more positive about employment prospects than large ones. Recruitment intentions were strongest in education, health and social work, finance and real estate, and information and communications.
The CIPD urged employers to start planning ahead to reduce the risk of widespread skills shortages emerging.
Two in five employers reported having hard-to-fill vacancies, broadly in line with the CIPD’s recent surveys. Engineering roles were the hardest to fill, followed closely by management and executive posts.
The CIPD said it was encouraged by the fact that more organisations planned to invest in their “talent pipeline” than in previous years.
Three in 10 employers with hard-to-fill vacancies planned to hire more graduates, one in five planned to hire more apprentices, and half planned to improve the skills of existing staff.
Gerwyn Davies, the CIPD’s labour market adviser, said prioritising investment in training would “not only help stave off the threat of recruitment difficulties increasing sharply in the future, but also help to boost productivity levels”.
Morgan McKinley, a financial services recruiter, said new job vacancies in the City had risen by 67 per cent last month compared with a year earlier.
Hakan Enver, operations director, predicted that City jobs would continue to grow despite Barclays’ plan to cut 19,000 jobs worldwide. While investment banking profits were down, organisations’ asset management, wealth and retail arms were growing.
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