UK bosses shift focus to training existing staff to fill workforce gap

Labour-shortened UK employers are increasingly planning to train existing staff rather than raise wages to attract new workers, a survey has shown, suggesting pay pressures may be easing.

About two-thirds of employers expect to have difficulty filling vacancies in the next six months, and one-third expect those difficulties to be severe, the CIPD human resources professional group said in its quarterly labor market outlook released Monday.

But few now think they can solve the hiring problem by providing more money. Of those struggling to fill vacancies, only 27% plan to do so by raising wages, compared with 44% in the past six months. In contrast, 37% said they plan to upskill existing employees, and a similar percentage aim to increase the availability of flexible working arrangements.

Jon Boys, CIPD’s labor market economist, said the study showed that “employers have lost momentum in their ability to raise wages further” and are increasingly focusing on retaining existing employees as External recruiting has become increasingly difficult. He added: “They say it’s hard to buy new skills at the moment. . . they need to instill them.”

The CIPD survey in April also found that employers were increasingly unlikely to absorb higher wage bills from profit margins, with more employers planning to raise prices.

Slower wage growth will relieve Bank of England policymakers, who warned earlier this month of a rapid rise in nominal incomes May keep high inflation for longer – even though wages are rising at a much slower rate than prices.

But the BoE believes pay pressure could increase after hearing from its agents that some businesses are considering one-time bonus And mid-year salary settlement increases.

CIPD found that businesses would refuse to raise wages to attract new employees. inconsistent with evidence from other investigations. Last week, the Recruitment and Employment Federation’s monthly report showed that the proportion of recruiters with higher starting salaries remained near record levels in April.

Compensation incentives remain historically high, the CIPD acknowledges. Among employers planning to conduct pay reviews in the next 12 months, they expect a median base salary increase of 3%, the highest rate since 2012.

Even in the public sector with tighter budgets, employers expect median pay to rise to 2% from 1% in the previous quarter.

But Boyce said public-sector employers — who are more keen to recruit than their private-sector counterparts but less able to increase wages and other benefits — may find it “increasingly difficult”. . . compete for talent”.

Overall income growth in the economy is often higher than compensation incentives, as some people get bigger raises through promotions, job changes or bonuses.

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