Wage inflation could be triggered -

Continuing falls in the level of unemployment combined with growing economic confidence and the stated intention of employers to recruit more staff during the current quarter could begin to place upwards pressure on wages, according to the Chartered Institute of Personnel and Development (CIPD), the professional body for all those involved in people management and development.

April’s quarterly HR Trends and Indicators survey, published by the CIPD, revealed that 53% of employers plan to recruit in the current quarter. Recruitment intentions are strongest in the finance and public administration sectors.

The CIPD is urging action to:
* Increase the proportion of economically inactive people returned to the jobs market
* Boost training of existing employees to tackle skills shortages
* Recognise the necessity for employers to recruit migrant workers at a time when the supply of labour is short and demand looks set to rise.

Duncan Brown, CIPD Assistant Director General, said:
This further reduction in the unemployment figures will place even greater pressure on organisations trying to recruit staff, and could potentially fuel wage inflation.

With officially recorded unemployment at record low levels, and employers planning to step up recruitment in the coming quarter, organisations are going to find it increasingly difficult to recruit suitably skilled staff. This could lead to upwards pressure on wages.

The challenge for policy makers is to take urgent action to get some of the record numbers of economically inactive people back into the jobs market to reduce the pressure on the jobs market, while also taking the heat out of the debate caused by the increasing necessity for employers to recruit migrant workers.

The challenge for employers will be to retain existing staff, invest in training to boost the skill levels of existing employees, or ultimately to find ways of offering the most attractive packages to fill vacancies in an increasingly competitive jobs market.