UK labour market report – “a dangerous game of chicken with pay rises” – reaction from HRs and recruiters

by | Aug 16, 2022

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Following the UK labour market data published this morning HRs and recruiters have reacted.

Chris Maslin, director at Tunbridge Wells-based employee ownership specialists, Go Eo: “Inflation is currently hurting workers more than businesses and that’s very evident in this latest data. The biggest price increases are on typical household running costs. At the same time, employees often have limited information on the company they work for. They don’t know whether it’s struggling itself or making huge profits. Whilst employees do seem to be in short supply at the moment, giving them some extra power, it can be a dangerous game of chicken being too demanding with their employer when it comes to seeking pay rises. Some companies literally can’t afford to pay staff more, and are starting to struggle, so the employee may be let go.”

Sam Alsop-Hall, Chief Strategy Officer at Birmingham-based healthcare and NHS recruiter, Woodrow Mercer Healthcare“Many employers are seeing staff directly asking for pay increases to help them navigate the cost of living crisis and soaring inflation, which are causing record salary falls in real terms. However, many companies are facing the same headwinds and simply don’t have the profits to be able to increase wages and salaries right now. The balance of power is beginning to shift from employees to employers, as having a stable and reliable income starts to be more important than flexibility and progression for many in the workforce. This will only exacerbate the skill shortages in the market and cause further headwinds for companies as they enter what the Bank of England predicts will be a protracted recession. We are now seeing a slowdown in the jobs market as people seek stability and are wary of moving jobs and being in probation periods or their first year of employment. This trend has caused a slight drop in job market confidence and has also seen employers begin to push back on the working from home model and set standards around number of days in the office.”

Louise Skittrall, founder of Swindon-based Robinson Grace HR Consultancy: “With the cost of living the primary narrative right now and income being hit for six in real terms, pay and perks are key to companies retaining and attracting staff. Employers offering money-saving incentives such as working from home, free parking, electric charging points or subsidised staff meals, will be considerably more attractive to prospective employees seeking a more cost-effective job choice. What we are also seeing in the marketplace is a greater number of resignations being refused, counter offers on the increase and more focus placed on employee engagement and retention than ever before. We are even experiencing employers being reticent about tackling serious performance issues with existing employees due to the difficulty of recruiting a replacement. Issues that may have previously been considered gross misconduct are being viewed against more lenient criteria rather than moving to dismissal.”

Kieran Boyle, MD of Gloucester-based CKB Recruitment: Candidates are still in the driving seat in the current jobs market, which is pushing up salaries and enabling them to have their pick of employers. It’s hard to know if the increased salaries we’re seeing being offered are linked to inflation or the candidate shortage in the UK, but it’s likely to be a mixture of the two. We are not expecting unemployment will rise for some time yet, as there are so many vacancies available in the UK jobs market currently.”

Karen Watkins, founder of Somerset-based Rowan Consulting: “There is waning confidence among employers as they wait to see what happens in the potentially turbulent months ahead. A first negative quarter of GDP growth will invariably make many employers stop and think about their hiring. The high job vacancies numbers are deceptive and are due to a widening gap in some areas such as retail and health and social care as a result of the flood of candidates leaving these industries and trades. My concern is that business owners are trying to fix individual problems in recruitment with no clear view or path on the wider picture. Paying higher salaries is high stakes stuff as we enter a period of extreme economic uncertainty. Doing so may cause companies serious problems later down the line if their revenues come under pressure.”

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