Employment rates set to grow but applicants must battle for jobs

Employment growth is set to continue in the second quarter of this year, but the jobs market remains a ‘battleground’, particularly for low-skilled workers. According to the Spring 2013 Chartered Institute of Personnel and Development (CIPD)/Success Factors Labour Market Outlook (LMO), 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 fifth consecutive quarter of projected growth. However, the median number of applicants employers receive for medium-skilled roles is 29, highly-skilled vacancies typically receive 10 applicants and pay rates continue to be squeezed.

The survey results are consistent with anecdotal reports of employers who report being inundated when they advertise vacancies  The survey shows that with 45 applicants applying for every low-skilled job, the labour market is still a challenge for job seekers, particularly those with less experience, skills or qualifications.

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 per cent from 1.8 per cent three months ago.  The evidence suggests that it will be some time yet before pay settlements rise consistently above 2 per cent – 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 per cent and consultancy services (3 per cent).

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.

He added: “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.”