The latest research from the Recruitment Confidence Index has found that recruitment activity is set to rise for the fourth quarter in a row and more than half of employers - 52% - expect the size of their workforce to increase. In addition, 23% of employers say the number of unfilled vacancies will go up over the next six months.
However, employers appear to be worryingly relaxed about how they will fill these vacancies. They are not planning an increase in recruitment spend, nor are they predicting a severe skills shortage. Although 38% are planning to increase their spending on commercial recruitment web sites and 31% say they will increase their spending on employment agencies, recruitment spend is largely set to remain the same.
Commenting on the results, Professor Shaun Tyson from Cranfield School of Management said: All the indicators this quarter point to increasing demand for labour. The question is will the supply of labour be readily available, especially in the íhot spotsí of the South East of England?
The imminent expansion of the European Union does have the potential to fill some of these jobs, but it is unlikely to have a dramatic impact immediately. Rising labour costs could see jobs going the other way and moving out of the UK to elsewhere in Europe.
Stephanie Richards, recruitment research manager at The Daily Telegraph said: The challenge facing employers is whether they are prepared for the pending hike in vacancies. If they intend to rely on the existing supply of labour, as seems to be the case, they will need to think seriously about how they use reward packages to attract, retain and motivate staff.
The buoyancy of the recruitment market appears to have had little impact on business confidence. Prior to the outbreak of the War in Iraq 65% of respondents reported optimism regarding business confidence. That figure plummeted during the crisis and remains at only 19% this quarter.
Miss Richards said: Business appears to be in a perpetual state of uncertainty. The threat of terrorism still looms along with the possibility of a rise in interest rates and a drop in house prices. It will be some time before we see more positive confidence ratings among employers.
The Recruitment Confidence Index was set up by Cranfield School of Management and The Daily Telegraph to measure employersí recruitment expectations and business confidence. It has been tracking recruitment plans for more than four years and attracts responses from nearly 1,500 employers in the public and private sectors. It is one of a basket of measures employers can use to test the health of the economy.
Other findings this quarter include:
Sales managers will be in greatest demand over the next six months with one in three employers - 33% - looking to recruit selling skills. IT staffing looks set to emerge from the doldrums. For the first time in four years employers are predicting a rise in demand for IT skills. Eighteen per cent say they will recruit IT staff over the next six months, up from 15% in the last quarter. The vast majority of employers - 86% - expect pay rises of less than 4%. However, the number of employers expecting pay awards to top 4% has risen slightly.
Rising demand for labour fuels debate on economic migration
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