Labour Market Outlook | Surveys

The quarterly Labour Market Outlook, produced in partnership with the The Adecco Group UK & Ireland 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.

About The Adecco Group UK and Ireland

The Adecco Group UK&I and its brands are part of the Adecco Group, the world’s leading HR solutions partner. As a Group, we provide more than 700,000 people with permanent and flexible employment every day. With more than 34,000 employees in 60 countries – 3,100 in the UK&I – we transform the world of work one job at a time. Our colleagues serve more than 100,000 organisations with the talent, HR services and cutting-edge technology they need to succeed in an ever-changing global economy. As a Fortune Global 500 company, we lead by example, creating shared value that meets social needs while driving business innovation. Our culture of inclusivity, fairness and teamwork empowers individuals and organisations, fuels economies, and builds better societies. These values resonate with our employees, who voted us number 5 on the Great Place to Work® - World’s Best Workplaces 2018 list. We make the future work for everyone.

The Adecco Group is based in Zurich, Switzerland. Adecco Group AG is registered in Switzerland (ISIN: CH0012138605) and listed on the SIX Swiss Exchange (ADEN). The Group is powered by nine lead brands: Adecco, Modis, Badenoch & Clark, Spring Professional, Lee Hecht Harrison, Pontoon, Adia, General Assembly and YOSS.

The Adecco Group UK&I’s head office is located in London, UK. We have 11 brands, including the Adecco Group UK&I, Adecco, Adia, Ajilon, Badenoch & Clark, Modis, Office Angels, Penna, Pontoon, Roevin and Spring.

Labour Market Outlook: Winter 2018-19

The Labour Market Outlook for this quarter is based on survey responses from 1,254 employers across the UK.

In addition to providing an overview of current market trends, the findings will have practical significance for employers and HR. The latest results show that the proportion of hiring employers with hard-to-fill vacancies has edged higher yet again, prompting more than half of those facing increasing difficulties to raise salaries to attract potential applicants. Organisations are also finding it hard to retain staff, with official statistics providing concurrent evidence that job-to-job moves are on the rise.

This quarter sees the first rise in basic pay expectations for the private sector since 2012. However, growth for the public sector has slowed, reopening the gap between the two. Should this continue, it could hold resourcing implications for the public sector over the longer term.

If there is to be a sustained improvement to pay, employers must renew their focus on raising organisational productivity, particularly through better management practice; the CIPD’s new practitioner guide, which will shortly follow this report, details some recommended actions.

Download the report below:

LMO Winter 2018-19

(821 KB)

Summary

Wages

Almost half (49%) of employers considering a pay review over the course of the year are anticipating an increase to basic pay. However, nearly as many (43%) say it is unknown at this stage which way it will go.

The findings also revealed a widening gap in pay expectations between the private and public sectors. Among private sector employers, the expected median pay has risen above 2% to 2.5% for the first time since tracking began in 2012. However, for the public sector, having climbed to a new high last quarter, pay rise expectations have slowed from 2% to just 1.1%.

Recruitment and retention

This quarter’s net employment balance, or the difference between the proportion of employers who expect to increase staff levels and those who expect to decrease staff, has dropped two points to +20 since last quarter. While this figure still represents a high degree of employment confidence, it does continue the narrative of a downward trend over the past four quarters.

The proportion of hiring employers with hard-to-fill vacancies edged higher again for the fourth successive quarter — 71% report that at least some of their vacancies are proving hard-to-fill. The level was at 64% a year ago.

Recruitment and retention continue to be pivotal challenges within a tight labour market, with 43% saying it has become tougher to fill vacancies over the past 12 months and 32% experiencing a similar problem in retaining staff. In response, a noticeably greater proportion of employers (56%) have raised starting salaries, up from 48% last quarter. Similarly, an increasing proportion (55%) of employers overall have used pay rises to help with retention.

Productivity and management practice

Employers are facing upward pressure to increase pay and so a renewed focus on productivity growth is needed to sustain this. The present predicament is that some 40% of employers either do not have measures of productivity in place or are unsure if they do, while half do not consider the term ‘productivity’ at all when talking about organisational performance. About two-thirds (64%) of employers do not have ‘improving productivity’ as a current priority.

A recent study by the Office of National Statistics examined the connection between management practices and productivity. Measures such as performance reviews, training, promotions and particularly managing underperformance, were seen as having the strongest positive correlation with productivity. Therefore, employers should invest in improving their management capability and encouraging high performance working practices for example, as part of broader considerations to raise organisational productivity.

Practitioners’ guide to the Labour Market Outlook

Our previous practice guide to the Labour Market Outlook — Summer 2018, with recommendations on how to frame a practice response to risks and opportunities, particularly in the area of recruitment

Access the guide