Scottish employers are indicating strong employment intentions for the third quarter of 2021, with confidence surpassing pre-pandemic levels. This is the key finding of the latest quarterly CIPD Labour Market Outlook (LMO) survey, involving more than 2,000 UK employers and covering all sectors of the economy. 

The survey found that its net employment intentions figure, which measures the difference between the proportion of Scottish employers expecting to add jobs and those planning to cut them, has continued to improve. The figure now sits at +29, up from +4 recorded  in January 2021.

The survey, which is forward-looking, found recruitment intentions are particularly strong.  More than two-thirds (67%) of Scottish employers plan to recruit in the three months to September 2021, up from 45% six months ago and 41% this time last year.  

There has been a dramatic shift in hiring intentions in some sectors since summer 2020. Across the UK, just 26% of hospitality/arts/entertainment employers were looking to hire last summer, increasing to 72% this summer. In transport and storage, this has increased from 33% to 65% of employers looking to hire. Both of these sectors have been impacted by the pandemic and changes to immigration as a result of Brexit, and are suffering from widely reported labour shortages.  

When asked how UK employers with hard-to-fill vacancies will deal with these vacancies, over two fifths of UK employers (44%) said they would upskill existing staff, a quarter (26%) said they would hire more apprentices, and 23% said they would raise wages. These tactics suggest employers are focusing their efforts on retaining the current workforce to address labour supply issues, as well as recruiting new staff.  

Lee Ann Panglea, Head of CIPD Scotland and Northern Ireland, the professional body for HR and people development, comments:  

“We are seeing a significant improvement in Scottish employer confidence, especially compared with the figures we recorded this time last year. Employers are very optimistic, indicating strong recruitment intentions and redundancy expectations appear much lower than originally predicted during the pandemic.

“As the furlough scheme winds down, employers will no longer be able to flex their workforce to meet demand by rapidly expanding and contracting staffing levels at minimal cost. Recruitment and retention will have to pick up the slack as employers look to plug any gaps in their workforce.

“In the absence of labour supply in some sectors, employers will need to think more long-term about how they meet skills needs. Organisations should look carefully at their recruitment and retention strategies and consider where they need to develop these, for example by increasing investment in training and reskilling. Employers also have a huge role to play in improving working lives, and fair work principles should be kept in mind when building retention and recruitment strategies.”  

Other key findings from the report include:

- The number of Scottish employers looking to make redundancies has settled around 9%, compared to 32% in summer 2020. With the survey covering the period up to the end of September, this suggests that the end of the furlough scheme should be a relatively smooth transition with minimal job losses.  

- Over three quarters (77%) of Scottish employers are planning a pay review in the 12 months to June 2022. Among these employers, over a third (37%) expect a pay increase, 7% expect a pay freeze and just 2% expect a pay decrease. Two-fifths (39%) said it is hard to tell and will depend on organisational performance.  

- Median basic pay settlements across the UK remain at 2%, the same as last quarter. This is a slight uptick from the 1% reported for four consecutive quarters in 2020.

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