What impact has Brexit uncertainty had on salaries and recruitment plans?

It is difficult to look at the news without seeing another story hinting at doom and gloom within the UK economy. Whilst I don’t pretend to be an economist and I definitely don’t have a crystal ball, it is clear that our clients – some of the top employers across the UK – aren’t being swayed by the headlines and feel that the UK’s prospects are strong. Despite the economic and political uncertainty, it appears that employers are confident about the opportunities that lie ahead.

According to our recent survey of 17,500 professionals in the UK, activity levels are on a par with last year and employers are expecting this activity to continue, with nearly two-thirds of organisations continuing with their recruitment plans this year. In addition, overall salaries have increased by 1.8%. These are all positive indicators that growth and opportunities remain strong and are cause for optimism.

However, it is also apparent that competition for talent is rife and skills shortages are having a huge impact on businesses. Not only are skills shortages impacting on organisations’ ability to hire, but they are also negatively impacting on productivity, employee morale and growth plans. To varying degrees, they are prevalent in most of the sectors, industries and professions that we work in. IT and digital technology, for example, struggle to recruit top talent, construction is faced with a shortage and areas of qualified finance can’t find the skills they need. In many cases, this is due to a poor pipeline and new roles, with gaps being created that aren’t yet being met by the skills development.

It is also evident that the skills shortages are creating workplace pressure, adding to low employee morale and causing absenteeism due to stress, creating yet further challenges for employers. This is being fuelled by employees feeling dissatisfied with salary levels. Although we have seen an overall average salary increase of 1.8% across the UK, it is generally only jobs in areas of skills shortages that have seen significant increases and this is creating salary dissatisfaction. Employees are also largely dissatisfied with their opportunities for career progression, which is causing them to look elsewhere.

To summarise, I would say that the UK is currently in a strong position with an optimistic outlook, but…

Skills shortages are intensifying

The majority of employers say their top challenge when recruiting is a shortage of suitable applicants and barely any employers reported that they haven’t experienced any skills shortages over the past year.

Employers are concerned about productivity

Employers state that skills shortages are negatively impacting on productivity, growth and their business development plans. This is a key concern given the focus on improving the UK’s productivity.

Employees are feeling the pressure

Employee morale is suffering due to skills shortages and there has been an increase in absenteeism due to workplace stress. Employers can better utilise temporary workers to alleviate some of the pressure.

Salaries are creating discontent

An overall lack of salary increases is causing dissatisfaction and employers appear to have a subdued approach to salaries for the coming year, which is likely to further exacerbate the situation.

Careers are being stifled

Employees are looking for greater scope to progress their careers but they feel that employers aren’t offering them future career progression opportunities. Despite this, they remain ambitious and would like to develop new skills to further their opportunities.

Therefore, there is still work to be done to make sure organisations can capitalise on the opportunities they have, deliver the activity they are planning and remain productive. This is pressing given the political uncertainty that we are likely to be faced with, and how critical talent is to enable them to remain competitive. Employers need to invest in their people strategies now to ensure they are best placed to tackle the challenges and combat the uncertainty as we inch closer towards Brexit.

Attend one of our events and webinars where we will discuss the Hays UK Salary & Recruiting Trends 2018 guide in more detail. 

For more information or to discuss your recruitment needs, please contact your local consultant.