13 May, 2013

Employment growth in Second Quarter 2013

13 May, 2013

The Spring 2013 Chartered Institute of Personnel and Development (CIPD)/Success Factors Labour Market Outlook (LMO) survey report – published today – suggests that employment growth is set to continue in the second quarter of 2013.

The report shows that the net employment balance – which measures the difference between the proportion of employers who expect to increase staffing levels and those who intend to reduce staffing levels, has increased to +9 from +5 for the previous quarter.  The net employment balance for the private sector is +21, up from +16 last quarter.  This is the fifth consecutive quarter of projected growth according to the Labour Market Outlook report, which continues to accurately predict official employment statistics quarter on quarter.

However, despite these positive findings, the survey shows that with 45 applicants applying for every low-skilled job, the labour market is still a ‘battleground’ for job seekers, particularly those with less experience, skills or qualifications.   The survey results are consistent with anecdotal reports of employers who report being inundated when they advertise vacancies.   Meanwhile, the median number of applicants employers receive for medium-skilled roles is 29, while highly- skilled vacancies typically receive 10 applicants.

The report also shines a light on the extent to which certain groups are excluded from the recruitment process.   14 per cent of employers said they would not consider employing school-leavers and 11% would not recruit from the ranks of the long-term unemployed.

Gerwyn Davies, CIPD Labour Market Adviser, comments: “Signs of increasing buoyancy in private sector job prospects is encouraging, especially since other forward-looking labour market indicators have been equally positive of late.  Even though last month’s official figures showed a slight dip in the level of employment, these findings suggest that further employment growth is possible.  However, with a projected increase of half a million people to the UK population over the next 12 months, the number of jobs being created may fail to keep pace with the population growth.  In this scenario, we could see employment rising accompanied by increases to unemployment; as the Office for Budget Responsibility expects.

“Against this backdrop, it is perhaps unsurprising that the labour market at present is a battleground for job seekers, particularly those with fewer skills or qualifications. With more than forty applicants typically chasing every low-skilled job already; there’s a danger that the stricter requirements being imposed by government on benefit recipients to look for work, coupled with the ongoing shift towards online recruitment, may lead to even more applicants for employers to consider for each vacancy in the future.  It is very tempting for employers to feel overwhelmed by such a high volume of applicants and to set a high bar for their needs today.

“However, employers should see it as an opportunity to draw on a wider pool of talent for their needs tomorrow to help address skills shortages and improve their talent pipelines.  Our recent report exploring employers’ recruitment practices highlights the importance of employers ensuring that they don’t inadvertently screen out candidates of different ages or backgrounds for the wrong reasons, for example, by requiring degrees for roles where they are not needed.   Such an approach would marginalise young people most and add to the pool of wasted young talent”.

Also commenting, James Reid, UK and Ireland Managing Director, SuccessFactors, said:  “Long term unemployment, particularly youth unemployment, can create a ‘lost generation’ of people whose professional and personal development has been severely hampered by being out of work. The overall impact of this skills gap is a society incapable of meeting the productivity demands of a globalised economy. The whole world will suffer if we do not find a solution for this significant challenge. We must not only identify industries that will hire our unemployed, but we must also give them the skills and confidence to succeed.”

Further findings from this quarter’s survey include:

  • Expected increases in employment levels this quarter are strong in manufacturing and production (net positive balance of +16) and private sector services (+21); especially in IT (+36) and consultancy services (+25).
  • Overall, the private sector employment balance has risen to +21 from +16 during the previous three months.  By contrast, public sector employment levels are set to fall further in the second quarter of 2013 (-32).The LMO survey also finds an expected average pay settlement in the twelve months to March 2014 of 1.6%.
  • Excluding bonuses, the average pay award forecast by employers who expect to have a pay review in the coming year has fallen to 1.7% from 1.8% three months ago.  The evidence suggests that it will be some time yet before pay settlements rise consistently above 2% – implying a sustained period of squeeze on real incomes given the current rate of price inflation.  However, there is evidence of upward pay pressure in some parts of the private sector, notably finance and insurance (3%) and consultancy services (3%).

Credit: onrec.com