The CIPD’s latest Labour Market Outlook has revealed that labour shortages are persisting in the North, with 54% of employers reporting hard-to-fill vacancies. This has led to over a third (34%) of employers expecting to raise wages over the next six months to stay competitive.

The quarterly survey – from the professional body for HR and people development - found that the median base pay rise expectation among employers has reached 5%. This is a new record high for CIPD’s quarterly employment barometer which goes back to 2012. However, median anticipated public sector pay rise expectations of 2% lag those in the private sector at 5%, with the gap providing the context for ongoing discontent and strikes among key public sector workers.

Other findings reveal that six in ten employers (65%) in the North expect to hire in the next three months and anticipated redundancies remain below pre-pandemic levels. However, despite strong hiring intentions, more than half of employers (60%) expect the problem of hard-to-fill vacancies will persist over the next six months.

Of those organisations that have, or plan, to raise pay in response to hard-to-fill vacancies, 50% plan to achieve this by raising prices rather than lowering profits and absorbing costs (47%).

The most common approaches used by employers in the North to address hard-to-fill vacancies in the past six months are to raise wages (50%), upskill existing staff (48%), followed by increasing the duties of existing staff (39%) and hiring more apprentices (30%).

The CIPD is urging the government to reform the failing apprenticeship levy to make it more flexible and boost further employer investment.

Daphne Doody-Green, Head of CIPD in Northern England said: “It’s positive to see many employers taking steps to tackle skills shortages by upskilling existing staff and hiring apprentices.

“However, the North has a higher amount of low wage work, skills gaps and poor utilisation of people’s skills in the workplace, compared to the national average. This is why we are urging the government to help boost employer investment in training to ensure people’s skills are used more effectively in the workplace.”

She adds: “The government needs to re-think its skills policy, including reforming the Apprenticeship Levy, to incentivise Northern employers to provide more apprenticeships for young people, so they have a genuine alternative to university.  If it fails to do so, the North and other regions of the UK, will stand little chance of transitioning to a high-wage, high-skill economy.”

The CIPD survey also suggests that employers appear to be more receptive to hiring people who are returning to work after having time out of the labour market, for reasons other than having a child, such as other caring responsibilities or a health condition. Close to a third (32%) plan to do this in the next three years.

Employers in the North also plan to hire more older workers (47%) and parent returners (38%), in a bid to fill hard-to-fill vacancies.

Jon Boys, Senior Labour Market Economist for the CIPD comments:  “Many employers are recognising the potential to attract certain groups to fill vacancies  - particularly older workers, carers and those with health conditions – but this also requires a focus on improving job quality, particularly flexibility.

“The forthcoming introduction of a day one right to request flexible working should prompt more employers to ensure that they advertise jobs as flexible and provide a range of flexible working practice to attract and retain a more diverse workforce. However more needs to be done to help provide employers, particularly SMEs, with access to occupational health services or support, to help them to keep our ageing workforce healthy and in work.”

Ends

CIPD Press Enquiries

Kim Bailey, CIPD Communications Specialist e: kim.bailey@cipd.co.uk

Press office: 0208 612 6400   press@cipd.co.uk

Notes to editor

• All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,012 senior decision-makers in the UK. Fieldwork was undertaken between 03.01.23 and 25.01.23. The survey was carried out online. The figures have been weighted and are representative of UK employment by organisation size, sector and industry.
• Report available to media in advance and available from this web page from 00.01 13 February 2023 Labout Market Outlook: Winter 2022/23
• The CIPD is the professional body for HR and people development. The registered charity 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 a community of almost 160,000 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.