Jobs growth predicted for next year, along with skills shortages ⁰

More than two fifths (43 percent) of firms will grow their workforce next year, with permanent jobs outstripping temporary roles according to the latest CBI/Accenture Employment Trends Survey. Firms identify skills shortages as the top threat, with over half (52 percent) of respondents citing the development and maintenance of digital skills as having a new urgency. More than half intend giving staff a pay award at or above the RPI rate of inflation, but nervousness remains about the impact of the National Living Wage (NLW). Half (51 percent) of service sector respondents indicate they will raise their prices, 27 percent will employ fewer people and 18 percent will make changes to their reward packages as a result. Multi-skilling employees to improve productivity and the capacity to adapt is now the leading form of flexibility, operated by nearly four in five respondents (79 percent), followed by flexibility over location for work (73 percent).

The annual survey – in its 18th year, and with 342 respondents employing nearly 1m employees – found that despite the upbeat picture on job creation, firms are concerned about rising labour costs through the planned National Living Wage (NLW) and the apprenticeship levy, and against the backdrop of an unreformed business rates system.

As the economy heads towards full employment, there is a risk that skills shortages continue to worsen. Further restrictions on skilled migration would hamper business activity, with 29 percent of companies affected reporting they would fail to meet customer demand if they were unable to get the right person, in the right place at the right time. And more than a quarter of respondents said they would look to move certain functions or activities overseas.

Emma McGuigan, Managing Director, Accenture Technology, UK & Ireland said:

“Business optimism is absolutely clear, but these findings also signal a real challenge in the employment landscape. Most significantly, just under half (46 percent) of respondents reported a lack of skills is threatening to have a major impact on the UK’s labour market competitiveness.

“For that reason, over half (52 percent) of respondents cited the development and maintenance of digital skills within organisations as having a new urgency, especially as a way to develop new revenue streams. The workforce of the future will not just be more digitally literate, but more capable of delivering new digital business models, customers experiences and business partnerships. These broader digital skills will be essential to boosting the UK’s competitiveness and sustainable employment growth.”

Carolyn Fairbairn, CBI Director-General, added:

“Skills shortages remain a problem, so both the Government and businesses must contribute to building a higher skilled domestic workforce as well as allowing British companies access to the most capable people from overseas.

Looking at the findings on job prospects and pay, the survey shows that the health of the UK economy (CBI forecasts GDP growth of 2.4 percent in 2015 and 2.6 percent next year) is reflected in the labour market, as more people are now in work than ever before across all regions of the UK, with the number of people in employment rising by 419,000 in the last year.

Growth in permanent jobs (35 percent plan to increase recruitment of permanent positions with 11 percent planning to reduce it, leaving a positive balance of +24 percent) is set to increase faster than temporary positions (16 percent plan to increase recruitment of temporary positions with 12 percent planning to reduce it, leaving a positive balance of +4 percent).  Encouragingly, the survey found 62 percent of businesses expecting to have entry-level roles suitable for young people aged 16-24.

Graduate positions are also set to rise, though at a slower rate than last year. 22 percent of firms are set to increase graduate recruitment, with 6 percent planning to cut back, leaving a positive balance of +16 percent.

Other highlights from the survey include:

• When asked about their view of the UK as a place to invest in five years’ time, there is still considerable optimism: two fifths (41 percent) of businesses anticipate that the UK will be much more or slightly more attractive in the future
• 25 percent this year believes the UK will become a less attractive business location in five years’ time. This means the overall balance of respondents expecting the UK to be a more attractive place to invest and do business in future has declined from +31 percent in 2013 and +25 percent in 2014 to +16 percent this year
• The new right to Shared Parental Leave (SPL) has proved largely problem free. Half of respondents (50 percent) have simply updated their HR policies to reflect the new rights

Click here to download The Path Ahead: CBI/Accenture Employment Trends Survey 2015