The quarterly Labour Market Outlook is one of the most authoritative employment indicators in the UK and provides forward-looking labour market data and analysis on employers’ recruitment, redundancy and pay intentions.

Labour Market Outlook: Spring 2022

Recruitment intentions are above pre-pandemic levels and appear to be on an upward trajectory. Almost three-quarters (74%) of employers say they are planning to take on new staff in the next three months. But as expected, recruitment difficulties remain, with 45% saying they have hard-to-fill vacancies.

The most popular response to hiring difficulties has been to raise pay (44%). But employers may be reaching a limit on how much further they can go on pay: only 27% anticipate raising pay in future to address hard-to-fill vacancies. Encouragingly, employers are also looking to other means to tackle staffing challenges: 39% have focused on upskilling more existing staff and 38% have advertised more jobs as flexible. These are vital factors in improving job quality and will be increasingly important for employers as they wrestle with recruitment as well as retention.

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Employment confidence remains high

The net employment balance – which measures the difference between employers expecting to increase staff levels and those expecting to decrease staff levels in the next three months – remained high at +36, after reaching +37 last quarter. This continues to exceed pre-pandemic levels, pointing to strong employment intentions.

Raising pay the most popular response to hiring difficulties

Employers have responded to recruitment challenges by raising pay (44%), upskilling existing staff (39%) and advertising more jobs as flexible (38%). However, employers may have reached a limit to how much further they can go on pay: only 27% anticipate raising pay to address recruitment challenges in the next six months.

Hard-to-fill vacancies prevalent and persistent

Forty-five per cent of employers have hard-to-fill vacancies. These are most common in healthcare (54%), the voluntary sector (49%) and education (49%).

Redundancies remain below pre-pandemic level

Relative to historical levels, redundancy intentions among employers remain low at 13%. This figure stood at 33% in summer 2020 and 16% prior to the pandemic.

Pay rises lag behind inflation

In a continuation of the trend seen last quarter, employers expect median basic pay awards to stay at 3%. This is the highest recorded since this report started in its current form in winter 2012/13. Despite this, it is still expected to be outpaced by forecast increases to inflation.

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