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UK companies look beyond pay to deal with recruitment challenges

A UK survey found that only 27% of companies anticipate raising pay to ease recruitment difficulties in the next six months.

UK employers' hiring intentions remain high and above pre-pandemic levels, according to data released this week, but only 27% plan on increasing pay to help recruit in the future.

The Chartered Institute of Personnel and Development's (CIPD's) latest quarterly Labour Market Outlook found that almost three-quarters (74%) of employers are planning to recruit in the next three months. Only 6% of employers plan to decrease staff levels over the next quarter, the CIPD found.

However, it is still a tight labour market with almost half of UK employers reporting that they have hard-to-fill vacancies, and almost two-thirds anticipate problems filling vacancies in the next six months.

Figures issued Tuesday from the UK government's Office for National Statistics (ONS) revealed that the number of job vacancies in February to April this year rose to a new record of 1,295,000 — an increase of 33,700 from the previous quarter. The data for the past three months also showed an increase of 499,300 from the pre-pandemic level in January to March 2020.

Recruitment challenge: Employer response

According to the CIPD survey, employers have responded to recruitment challenges by:

  • Raising pay (44% of employers).
  • Upskilling more existing staff (39%).
  • Advertising more jobs as flexible (38%).

However, the data suggests employers may have reached a limit on how far they can go on pay: Only 27% anticipate raising pay to address recruitment challenges in the next six months.

Jonathan Boys, CIPD labour market economist, said in a press statement that "pandemic-induced re-evaluation and a tight labour market have pushed flexibility to the fore", with new recruits having more power to dictate the terms that work for them.

He added: "If the ability to award pay rises is limited, employers can look at the total employment offer. Financial wellbeing support can make a difference, as can revisiting the mix of benefits offered to make sure they work hard for employees, especially the lowest paid."

Hiring process

UK research released in April by recruiter Robert Half showed that nearly half of senior decision-makers believe they have made a bad hire in the past 12 months, with small businesses more likely to experience a bigger impact.

The survey — across the finance and accounting, financial services, technology, HR, and marketing sectors — also revealed that more than half of business leaders feel pressured to pay new hires more than current employees, adding to the consequences of making a bad hiring decision. A total of 56% of businesses rushed the hiring process, the research found.

— To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.