More than three-quarters of workers are reluctant to switch employer, finds CIPD

Little appetite among workers to switch employer finds CIPD There is little appetite among workers to switch employer, despite the growth in employment prospects in the UK. This is according to the CIPD quarterly Labour Market Outlook report which suggests that employment will again grow strongly in the final quarter of 2014 but wage growth is likely to remain subdued. The latest report shows that near-term employment expectations have risen to a seven year high, which can be partially attributed to fewer employers looking to make redundancies, as well as an expected continuation of the trend for many employers to be hiring new staff. The proportion of employers reporting hard-to-fill vacancies is broadly unchanged (44%) and two fifths of these are reported as ‘skill shortage’ vacancies. With over three-quarters (77%) of employees saying that they aren’t currently looking to change employers, there is a resultant reduction in churn amongst the existing workforce. This, combined with a growing number of EU immigrants and older people seeking work and an ongoing skills shortage, goes some way to explaining weak pay growth.

Gerwyn Davies, public policy adviser for the CIPD said: “Predictions of pay growth increasing alongside strong employment growth is the dog that hasn’t barked for some time now, and we are still yet to see any sign of this situation changing in the near-term.

“The facts remain that company profitability and productivity levels are still well below pre-recession levels, while it is also clear that the majority of employers can still find suitable candidates to employ at current wage rates due to strong labour supply. Against the backdrop of very modest pay increases in the public sector and various labour costs, we need to inject a dose of realism into the trajectory of future pay expectations.”

Private sector firms are driving much of the predicted growth in job creation, accelerating sharply to +46 from +35 on the last quarter. Public sector hiring intentions for the same period have fallen to -23 from -14, highlighting the growing polarisation between the two sectors.

These data show there is still strong competition for jobs because the labour supply is increasing. Evidence from CIPD’s report suggests, in line with official ONS employment figures, that EU migrants and older workers are key contributors to the increase in labour supply. More than a quarter of employers (26%) reported an increase in EU applicants in the twelve months to September 2014 and almost a quarter (23%) again registered more interest from workers aged 55-65. A further 8% of employers reported an increase in applicants aged over 65.

Said Davies: “It’s only by boosting the UK’s productivity levels that we will achieve the sustained economic growth and competitiveness we need to in order for salaries to improve. However, to do this, we need to understand the structural causes of low pay and poor productivity in the UK, and a put a greater focus on skills utilisation across all sectors. There are tentative and encouraging signs that business investment is starting to tick up, but any investment in new technology or equipment needs to be matched by investment in training in order to help managers deploy any additional resources efficiently.”