The latest Labour Market Outlook from the CIPD, the professional body for HR and people development, suggests that wage inflation is unlikely to take off in the next year due to limited skills shortages and subdued pay settlement forecasts from employers.
The quarterly survey of more than 1,000 employers shows that across all sectors just 15% of current job vacancies are proving difficult to fill. It also reveals that, outside a limited number of industries, UK employers continue to be able to recruit the workers they need without significantly hiking wages and that median basic pay rises of just 2% are predicted by employers in the 12 months to September 2016.
The Labour Market Outlook finds that the number of applicants per vacancy has remained steady over the past year, with average applications for jobs running at 25 for each low-skilled role, 15 for medium-skilled roles and 8 for highly-skilled roles. This suggests that in general, most businesses are seeing a steady flow of suitable candidates, despite unemployment falling to a seven-year low in October and despite a slight year on year increase (44%-49%) in the number of employers reporting any hard to fill vacancies.
The most common employer response to hard-to-fill vacancies are up-skilling existing staff (48%), followed by hiring more apprentices (27%), recruiting migrant workers (23%) and raising starting salaries for hard to fill positions (22%).
Across all organisations reporting any job vacancies, the proportion of hard-to-fill vacancies is only modestly higher in the private sector (16%) than the public sector (11%).
Focusing on organisations reporting recruitment difficulties, the proportion of hard-to-fill vacancies is greatest in the manufacturing and production sector (24%), which includes industries such as construction and utilities, and private sector services (24%), which covers industries such as finance and retail.