The Office of National Statistics has stated that unemployment has fallen to a seven-year low. ONS statistician Nick Palmer said:
“These figures continue the recent strengthening trend in the labour market, with a new record high in the employment rate and the unemployment rate still at its lowest level since spring 2008.”
Despite this, research has shown that pay growth has remained weak during this period. However, this is subject to change, according to a report published by Hays Recruitment. Continued skills shortages in the UK, alongside the growth in employment and increased business confidence, will put pressure on employers to start increasing salaries in 2016. According to Hays’ survey, two-thirds of employers said they will expect to increase salaries in the new year, some by up to 2.5%.
With over half of employees dissatisfied with their current level of pay, more pressure is being placed on employers to pay more for their much needed talent.
Nigel Heap, managing director of Hays UK and Ireland, said: “Increasing confidence in the UK economy is seeing businesses predict a busy 2016. The impact on the employment market is a further shift in power to candidates as they look for better pay and opportunities too.
This, combined with the UK’s skills shortage, is likely to create a pay ‘pressure cooker’ in 2016 which employers need to be prepared for.
“The UK’s skills shortage is a real concern and will only put further pressure on employers next year. We need to ensure that the UK is open for business to overseas talent and that there is further investment from businesses in training and skills development. It will be those employers who can offer competitive remuneration packages, clear career development paths and relevant training programmes that will be best placed to attract the top talent required to succeed next year. Those that don’t, risk stifling their growth plans.”