Skills shortages expected to last as Real Living Wage rises

A new report shows the skills shortage is likely to continue and that it is widespread.

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Almost half of employers report having vacancies that are hard-to-fill and more than one in four expect the number of vacancies that are difficult to fill to increase in the next six months, according to a new report.

The latest quarterly Chartered Institute for Personnel and Development [CIPD] Labour Market Outlook, which surveyed more than 1,000 employers across all sectors of the economy, found that the proportion of employers with hard-to-fill vacancies jumped from 39% to 47% this quarter and that hard-to-fill vacancies are most prevalent in construction, healthcare and public administration and defence.

Nearly three quarters (71%) of employers surveyed are planning to recruit in the three months to December 2021. One in 10 employers are planning to make redundancies, down from 13% last quarter. This comes after figures show that the number of people unemployed after the furlough scheme ended in September was lower than predicted.

The report shows how employers are looking to attract and retain workers amid the skills shortage. Almost half (47%) have raised wages over the past six months to help offset hard-to-fill vacancies. Other popular tactics include upskilling existing staff (44%), hiring more apprentices (27%) and improving job quality (20%).

The report also calls for a  temporary job mobility scheme for young EU nationals, particularly for low-skilled roles that are proving more difficult to fill.

The report also shows over four-fifths (84%) of employers are planning a pay review in the 12 months to September 2022. Among these, around four in 10 (39%) expect basic pay to increase, 11% expect a pay freeze, while just 1% expect a decrease. Employers report that the median basic pay increase in their organisation (excluding bonuses) in the 12 months to September 2022 will be 2%, the same as last quarter.

Meanwhile,  rises have been announced for the Real Living Wage bring the hourly rate to £11.05 in London and £9.90 outside the capital, increases of 20p and 40p respectively. The Living Wage Foundation said almost 9,000 UK employers now pay the wage, which is higher than the statutory National Living Wage of £8.91 an hour for adults. One in 13 people now work for an accredited Living Wage employer, said the foundation, with 3,000 firms signing up to the policy during the pandemic. Latest research by the Living Wage Foundation shows that there are still 4.8m jobs – 17.1% of all employees – still paying less than the Real Living Wage in the UK.

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