LABOUR MARKET OUTLOOK · 2020-01-14 · 2 Labour Market Outlook Autum 21 1 Foreword from the CIPD...
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in partnership with OUTLOOK VIEWS FROM EMPLOYERS LABOUR MARKET Autumn 2019
Transcript of LABOUR MARKET OUTLOOK · 2020-01-14 · 2 Labour Market Outlook Autum 21 1 Foreword from the CIPD...
in partnership with
OUTLOOKVIEWS FROM EMPLOYERS
LABOURMARKET
Autumn 2019
The CIPD is the professional body for HR and people development. The not-for-profit organisation champions better work and working lives and has been setting the benchmark for excellence in people and organisation development for more than 100 years. It has 150,000 members across the world, provides thought leadership through independent research on the world of work, and offers professional training and accreditation for those working in HR and learning and development.
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Labour Market Outlook Autumn 2019
Contents 1 Foreword from the CIPD 2
2 Foreword from the Adecco Group UK and Ireland 3
3 Key points 4
4 Recruitment and redundancy outlook 5
5 Job vacancies 8
6 Pay outlook 10
7 Survey method 12
Report
Labour Market Outlook Autumn 2019
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Labour Market Outlook Autumn 2019
1 Foreword from the CIPDCommentators attempts to predict a high-water mark in employment have been succeeded by a labour market that has defied expectations. The main story in this quarter’s Labour Market Outlook (LMO) is that employers continue to expect staff numbers to increase in the period immediately after the 31 October Brexit deadline. Employers are expecting a business as usual approach to staff resourcing. Orders still need to be filled and talent pipelines need to be planned.
Many are asking how employment has been so strong despite Brexit uncertainty. The most obvious response is that we have not yet left the EU. Another ‘tentative explanation’ for the strength of employment growth despite all the uncertainty has been offered by Gertjan Vlieghe of the Bank of England. Businesses may not be keen to spend money on costly investments such as buying specialist machinery because this is difficult to reverse. Employment decisions are less costly to reverse.1 Staff levels can be run down, not necessarily through redundancies but through hiring freezes and natural churn. During the last downturn, unemployment thankfully grew less than anticipated. During the next downturn, which many expect will come sooner rather than later,2 we might not be so lucky.
Constraints on public sector pay are being eased and this is evident in the survey data. Public sector employers are now more likely to raise starting salaries in response to recruitment difficulties and salaries in general in response to retention difficulties. The public sector/private sector gap between expected forward-looking pay awards has also narrowed.
Jonathan Boys, Labour Market Economist
Foreword from the CIPD
1 Gertjan Vlieghe. (2019) The economic outlook: fading global tailwinds, intensifying Brexit headwinds.2 Resolution Foundation. (2019) Recession ready? Assessing the UK’s macroeconomic framework.
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Labour Market Outlook Autumn 2019
2 Foreword from the Adecco Group UK and Ireland
As I write this foreword, the Government has just announced a General Election for 12 December and the UK has not exited the EU. Much has changed since I wrote the foreword for the summer edition of this report, when the date for Brexit had been set for 31 October 2019.
The clarity of a confirmed date for Brexit at the time of data collection has no doubt influenced the sentiment reflected in this autumn edition of the Labour Market Outlook report, which shows that employer confidence for Q4 has increased from +18 to +22. Construction (+38), administrative and other service activities (+30) and healthcare (+30) have the highest levels of confidence. Public administration and other public sector, is the only category with a negative score (–5).
The LMO’s measure of employment confidence score has fluctuated between +15 and +22 since the June 2016 referendum and remains at its highest post-referendum level. With the Brexit deadline postponed once again, we might expect to see greater fluctuation by our Q1 2020 LMO. Although 86% of companies are planning pay reviews in the next 12 months, uncertainty about future access to the EU market influenced only 22% of companies’ decisions to consider low pay rises below 2%. Businesses are playing a waiting game, steadying the ship while politics plays out.
In a tight employment market, intensified by the delayed Brexit negotiations, there is an opportunity to make use of the extra time to boost engagement and retention by turning attention towards internal mobility, career pathways and upskilling. We know from our own research that only 27% of employers feel they have enough information to start making post-Brexit recruitment decisions, but we can act now to improve retention.
Alex Fleming, Country Head and President of Staffing and Solutions, the Adecco Group UK and Ireland
Foreword from the Adecco Group UK and Ireland
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Labour Market Outlook Autumn 2019
3 Key points
1 The net employment score – our measure of
employment confidence over the next quarter – has increased from +18 to +22. The score is highest in construction (+38), administrative and support service activities and other service activities (+30) and healthcare (+30).
2 Many employers reported hiring difficulties as a result of a tight labour market. Just over two in five (43%) employers said it had become more difficult to fill vacancies in the past 12 months. Just 5% said it had become less difficult.
3 The majority of LMO employers (86%) are planning a pay review in the next 12 months to August 2020. Among these employers, nearly half (48%) predict a pay increase.
4 The gap has narrowed for expected pay settlements between public and private sector. The expected median basic pay settlement among private sector employers planning to have a pay review is 2.2%. This compares with 2% in the public sector.
5 Inflation remains the largest factor behind pay increases above 2% (47% of LMO employers), followed by market factors such as the going rate elsewhere (34%) and recruitment and retention pressures (31%).
Net employment score increase
Difficulty filling vacancies
Inflation largest factor behind pay increases above 2%
Predict a pay increase
48%
Pay settlement gap narrowing
Key points
+18+22
2.2%PRIVATE
£
2%PUBLIC
43%
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Labour Market Outlook Autumn 2019
4 Recruitment and redundancy outlook
What is the short-term employment outlook?This section focuses on the recruitment and redundancy intentions of employers in the fourth quarter of 2019. The net employment balance is our measure of employment confidence. It is the difference between the number of employers that are seeking to increase headcount and the number seeking to decrease headcount in the coming quarter. The score remains positive and has grown from +18 to +22 this quarter. The increase in the net employment score is driven by a larger proportion of employers saying that they will increase total staffing levels (Figure 1).
Figure 1: Decomposition of net employment balance over time
Dec
ompo
sitio
n of
net
em
ploy
men
t bal
ance
(sta
cked
bar
s)
Net
em
ploy
men
t bal
ance
(gre
y lin
e)
0
10
20
30
Autum
n 2016
Wint
er 20
16–17
Sprin
g 2017
Summer
2017
Autum
n 2017
Wint
er 20
17–18
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g 2018
Summer
2018
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n 2018
Wint
er 20
18–19
Sprin
g 2019
Summer
2019
Autum
n 2019
0
5
10
15
20
25
30
35
40
Base: Autumn 2019, all employers (n=1,016).
40
50
70
80
90
100
60
Don’t know
Increase total sta� level Maintain total sta� level
Quarter
Decrease total sta� level
Net employment score
31
4
16
30
50
4
16
30
49
5
12
30
53
6
13
32
49
8
14
30
48
5
11
37
46
5
11
33
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33
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51
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47 51
5
10
33
5
13
31
51
5
12
27
57
15 1614
18 1816
2623 22
2022
18
22
How to interpret Figure 1The net employment balance is an indicator of employment confidence. It takes the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff levels. Figure 1 contains the net employment balance over time to show how employment confidence has changed. It also shows what is responsible for this change, be it more firms increasing, decreasing, or maintaining staff levels.
Recruitment and redundancy outlook
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Labour Market Outlook Autumn 2019
Recruitment and redundancy outlook
The uptick in the net employment score was broad based across the business sectors. The public sector registered the largest increase from +2 to +14 (Figure 2).
Base: Autumn 2019, all employers (private n=761; public n=176; voluntary n=79).
–25
–20
–10
–15
–5
15
20
0
Net
em
ploy
men
t bal
ance
5
10
25
30
35
Figure 2: Overall eect of increasing or decreasing sta over the next three months, by business sector
PublicVoluntary
22
25
2014
Summer
2014
Sprin
g 2014
Autum
n 2014
Wint
er 20
14–15
Sprin
g 2015
Summer
2015
Autum
n 2015
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er 20
15–16
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Summer
2016
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n 2016
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er 20
16–17
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2017
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er 20
17–18
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2018
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er 20
18–19
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g 2019
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2019
Autum
n 2019
TotalPrivate
Quarter
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Labour Market Outlook Autumn 2019
Recruitment and redundancy outlook
Looking by industry, the net employment score is highest in construction (+38), administrative and support service activities and other service activities (+30) and healthcare (+30) (Figure 3).
Figure 3: Net employment score, by industry, last and current quarter (%)3
Public administration and other public sector
Education
Finance and insurance
Summer 2019
Base: all bases > 50. For breakdown of base sizes see Table 3.
Manufacturing
Wholesale, retail and real estate
Voluntary
Hotels, catering and restaurants/arts,entertainment and recreation
Business services (for example consultancy, law,PR, marketing, scientific and technical services)
Healthcare
Construction
SectorNet employment score, previous and current quarter
Information and communication
Administrative and support serviceactivities and other service activities
0 10 20 30 40
0 10 20
2838
38
26 30
30
29 34
28 29
10 24
16 22
17 20
18 24
2 17
–58
1 6
30 40
Autumn 2019
3 Note: sample size too small for primary and utilities, transport and storage, and police and armed forces.
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Labour Market Outlook Autumn 2019
Job vacancies
5 Job vacanciesHard-to-fill vacanciesSixty-seven per cent of organisations who are currently hiring have hard-to-fill vacancies. This has remained stable and is less than the same quarter of last year (Figure 4).
Prop
ortio
n of
LM
O e
mpl
oyer
s (w
ith v
acan
cies
)th
at c
urre
nlty
hav
e ha
rd-t
o-fil
l vac
anci
es
20
10
50
60
30
40
70
Figure 4: Proportion of organisations with current vacancies that have hard-to-fill vacancies (%)
64 6461
6670 71
61
67 67
0
Base: autumn 2019, all employers with vacancies (n=607).
Quarter
Autumn2017
Winter2017–18
Spring2018
Summer2018
Autumn2018
Winter2018–19
Spring2019
Summer2019
Autumn2019
80
Employers in public-sector-dominated industries record the highest incidence of hard-to-fill vacancies, with 75% of hiring healthcare employers struggling to fill roles (Figure 5).
Broa
d se
ctor
Figure 5: Proportion of organisations with current vacancies that have hard-to-fill vacancies (%)
Base: autumn 2019, all employers with vacancies (education n=66; private sector services n=288; manufacturing and production n=100; public administration and defence n=48; healthcare n=53).
% of LMO employers with vacancies that have hard-to-fill vacancies
71
68
75
Public administration and defence
Healthcare
Education
66Manufacturing and production
66Private sector services
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Labour Market Outlook Autumn 2019
Job vacancies
Base: autumn 2019, (public n=99; private n=289).
Labour Market Outlook Autumn 2019
Response to recruitment and retention difficultiesJust over two in five (43%) employers say it has become more difficult to fill vacancies in the past 12 months and 5% say it has become less difficult. More public sector employers are raising starting salaries in response to recruitment pressure (Figure 6).
Figure 6: Proportion of employers raising starting salaries in response to recruitment difficulties (%)
30
40
%
20
10
0
60
70
5056 56
6662
59 59
43
2927
25
30
37
Summer 2018 Autumn 2018 Winter 2018–19 Spring 2019 Summer 2019 Autumn 2019
Private Public
Base: autumn 2019, (public n=73; private n=224).
Figure 7: Proportion of employers raising salaries in response to retention diculties (%)
30
50
40%
20
10
0
70
80
60 6159
6260
65
70
3532
34 3330
41
Summer 2018 Autumn 2018 Winter 2018–19 Spring 2019 Summer 2019 Autumn 2019
Private Public
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Labour Market Outlook Autumn 2019
Pay outlook
6 Pay outlookWhat is likely to happen to wages in the next 12 months?Median basic pay expectations in the 12 months to August 2020 are 2%. The public sector continues an upward trend from 1.5% last quarter to 2% this quarter, while the private sector has seen expectations move down from 2.5% last quarter to 2.2% this quarter, narrowing the gap between the sectors (Figure 8). Just over a third (34%) of employers say it is hard to tell what will happen to pay.
Base: autumn 2019, all employers who report an expected increase, decrease or pay freeze in the next 12 months (total n=463; private n=319; public n=101; voluntary n=43).
Figure 8: Employers’ predicted annual basic pay awards (median employer), by business sector
Autum
n 2016
Wint
er 20
16–17
Sprin
g 2017
Summer
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Autum
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Wint
er 20
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Pred
icte
d an
nual
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ic p
ay a
war
ds (%
)
Public sector
Private sector
Voluntary sector
Overall net
Continuing the pattern of previous reports in the series, forward-looking basic pay settlements are centred around 2–3% (Figure 9).
45
5
40
30
10
15
20
25
35
Figure 9: Distribution of forward-looking basic pay settlements, autumn 2019 (%)
1
–2.0–2
.99
–1.0–1.
99
–0.1–
–0.99
Pay fr
eeze
0.1–+0
.99
1.0–1.
99
2.0–2
.99
3.0–3
.994.0+
0
Base: autumn 2019, all employers who report an expected increase, decrease or pay freeze in the next 12 months (total n=463).
Bands of pay change
0
9
01
15 12
41
22
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Labour Market Outlook Autumn 2019
Pay outlook
Reas
ons
behi
nd in
crea
se a
bove
2%
What are the factors behind employers’ basic pay decisions?Inflation remains the largest factor behind pay increases above 2% (47% of LMO employers), followed by market factors/the ‘going rate’ elsewhere (34%) and recruitment and retention pressures (31%) (Figure 10).
Figure 10: Top reasons for increase in average basic pay by 2% or more (%)
Base: autumn 2019, all employers who expect their organisation’s basic pay will increase by 2% or more (n=346).
4743
3437
3129
3025
2220
1312
1111
64
11
Inflation
Movement in market rates/the ‘going rate’ of pay rises elsewhere
Other labour costs, for example, theLiving Wage, the apprenticeship levy,
auto-enrolment pension scheme
Recruitment and retention issues
Organisation’s ability to pay more
The ‘ripple e�ect’ of higher starting salaries
Union/sta� pressures
Other
Don’t know
Autumn 2019
Summer 2019
% of LMO employers
0 5 10 15 20 25 30 35 40 45 50
The organisation’s inability to pay is the top reason for expecting pay awards below 2% (37% of LMO employers). Uncertainty about future access to the EU market remains a factor for just over a fifth (22%) of organisations (Figure 11).
Reas
ons
behi
nd in
crea
se b
elow
2%
Figure 11: Top reasons for increase in basic pay below 2% (%)
Base: autumn 2019, all employers who expect their organisation’s basic pay will increase by less than 2% (n=117).
3738
3141
22
18
18
20
139
115
1112
97
33
Organisation’s inability to pay more
To absorb labour costs, for example,auto-enrolment pension scheme, the
Living Wage, apprenticeship levy, etc
Restraint on public sector pay
Uncertainty about future access to the EU market
We have no recruitment and retention issues
Poor employee productivity and performance
Movement in market rates/the ‘going rate’ of pay rises elsewhere
Other
Don’t know
% of LMO employers
0 5 10 15 20 25 30 35 40 45
Autumn 2019
Summer 2019
12
Labour Market Outlook Autumn 2019
Survey method
7 Survey methodAll figures, unless otherwise stated, are from YouGov Plc. The total sample was 1,016 senior HR professionals and decision-makers in the UK. Fieldwork was undertaken between 6 and 27 September 2019. The survey was carried out online. The figures have been weighted and are representative of UK business by size, sector and industry.
WeightingRim weighting is applied using targets on size and sector drawn from the Business Population Estimates for the UK and Regions 2018. The following tables contain unweighted counts.
Table 1: Breakdown of the sample, by number of employees in organisation
Employer size band Count
2–9 175
10–49 190
50–99 81
100–249 93
250–499 99
500–999 83
1,000 or more 295
Total 1,016
Table 3: Breakdown of sample, by industry
Industry Count
Voluntary 79
Manufacturing and production 164
Manufacturing 92
Construction 54
Primary and utilities 18
Education 106
Healthcare 71
Private sector services 525
Wholesale, retail and real estate 65
Transport and storage 25
Information and communication 56
Finance and insurance 88
Business services (eg consultancy, law, PR, marketing, scientific and technical services) 119
Hotels, catering and restaurants/Arts, entertainment and recreation 73
Administrative and support service activities and other service activities 99
Public administration and defence 60
Police and armed forces 11
Total 1,016
Table 2: Breakdown of sample, by sector
Sector Count
Private sector 761
Public sector 176
Third/voluntary sector 79
Total 1,016
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Labour Market Outlook Autumn 2019
Survey method
Table 4: Breakdown of sample, by region
Region Count
North-east of England 31
East Midlands 60
West Midlands 66
Scotland 58
London 186
South-west of England 62
East of England 48
Wales 36
South-east of England 122
North-west of England 88
Yorkshire and Humberside 49
Northern Ireland 9
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Issued: November 2019 Reference: 7948 © CIPD 2019
