Tight labour market fuelling recruitment of migrant labour, but not wages,

A steadfastly tight labour market does not seem to be causing upwards pressure on wages, with employers opting to invest in the learning and development of their staff and other measures to hang on to talent, and turning to migrant labour to fill vacancies. These are some of the key findings of the latest Human Resources Quarterly Trends and Indicators Survey, completed for the Chartered Institute of Personnel and Development (CIPD).

Compared to the first and second quarter of 2004, the survey also suggests a slight easing of tight labour market conditions is on the way. The 17% positive balance of employers expecting to employ more staff by autumn 2005 over those expecting to employ fewer is the lowest recorded in the CIPD’s quarterly survey in 2004.

The survey found:

*Over half (52%) of employers expect to have increased the total number of employees on their pay roll by the end of the autumn.

*Difficulties with recruitment are expected by 48% of employers over the autumn.

*Amongst the quarter of all employers conducting a pay review in the autumn, two-fifths (41%) expect no increase in average pay levels, and 36% expect pay levels to increase by between 2% and 4%.

Dr John Philpott, CIPD Chief Economist, said:
While employers expect a slight easing in the labour market over the next year, it seems certain that recruitment difficulties will continue to be a problem for employers. It is encouraging, however, that employers are confident they can keep a lid on inflationary pay pressures, despite a combination of limited supply and relatively high demand in the labour market.

Migrant workers
Recruitment difficulties and skills shortages are sending employers overseas in their hunt for talent:
*Over half of all employers say professional vacancies (38%) and skilled trade vacancies (14%) have proved most difficult to fill over the summer.

*Almost one in three employers (28%) is planning to recruit workers from overseas this autumn.

*Amongst larger companies (more than 500 employees), this figure rises to 40%.

*Recruitment from abroad varies from region to region - in London, 45% of employers intend to recruit from abroad, compared to only 13% in the North East.

*The public sector is most likely to turn to migrant workers - 34% of public sector employers are planning to do so, compared to 27% in the private sector and 24% in the not-for-profit sector.

*Three-quarters (75%) of employers are offering migrant workers permanent contracts, while less than 10% are offering only short-term or seasonal contracts.

*Professional skills (45%) and technical skills (22%) are the main attributes that employers are seeking from abroad.

Dr John Philpott, CIPD Chief Economist, said:
Skills shortages are forcing employers overseas as they struggle to fill vacancies. This puts the heated political debate about immigration into perspective. If rules are tightened in an arbitrary way, employers across business and government could suffer.

It is interesting to note that the majority of employers are using migrant labour to fill vacancies requiring professional and technical skills, and are offering permanent contracts - against a common perception of low-skill, low-paid and casual jobs for migrant workers.

Regional variations
Difficulties filling vacancies are greatest, surprisingly, in regions where joblessness is relatively high. The North East (43%) and Yorkshire and Humberside (44%) are most likely to cite a lack of applicants as a problem when trying to fill vacancies.

Employers in the South East (87%) and London (88%) are most likely to be recruiting during the autumn. Employers in the North East (73%) are least likely to be recruiting this quarter.

Public sector vs private sector employment
Despite talk of public sector job cuts, 87% of public sector employers intend to recruit during the autumn, compared to 80% across the private sector and less than 70% in the primary production sector.

Dr John Philpott, CIPD Chief Economist, said:
The impression that the Chancellor is taking an axe to public sector jobs is widespread, but our survey appears to show a public sector still recruiting more enthusiastically than private firms.