The latest Labour Market Outlook from the CIPD and the Adecco Group – a survey of almost 2,200 companies on their recruitment and pay intentions – found that most employers were continuing to shrug off the uncertainties surrounding Brexit.But with employment levels in the UK already at a record high, half of respondents said they were having difficulties recruiting the skilled professionals they needed in areas such as science and engineering.

How are companies responding to skills shortages?

These shortages have resulted in 43% of companies rethinking their recruitment practices and turning to upskilling policies for existing staff, while 23% are hiring more apprentices and 19% recruiting from overseas."Two in five employers say it has become more difficult to fill vacancies in the past year," said the CIPD. "Skills shortages are particularly being seen in professional occupations where 50% of employers report that applicants don’t have the required level of skills needed."In response to skills challenges employers are having to rethink their recruitment practices and draw from a wider talent pool."

What is the impact on wages?

Despite the skills shortages, the survey found that median basic pay expectations for the 12 months to March 2020 remained at a modest 2%.Gerwyn Davies, senior labour market adviser for the CIPD, commented: “The majority of UK workers are long overdue a meaningful pay rise. However, many workers will remain disappointed with their pay packets until there are significant and sustained improvements to productivity."Organisations need to give much greater consideration to the obstacles that are preventing their people from performing better at work. A greater focus on training, development and better people management is needed to lift the UK out of its current productivity crisis."One upside is that many employers are already investing in developing their existing workforce to plug skills gaps. Strengthening workplace training and recruiting in a more inclusive, flexible way will ultimately deliver higher performing and fairer workplaces.”

Make, build or buy talent?

Alex Fleming, country head of Adecco Group UK and Ireland, added: “A skills-short market is not a new phenomenon in the UK; many of our clients have been operating successfully within this market for years."A lot of our clients are becoming increasingly innovative and agile in the search for talent. Organisations who are most effective in this market are those with sustained plans and programmes that are aligned to their strategies and culture.“Candidates with professional qualifications are those that the report highlights as the toughest to find, and these aren’t roles where relaxing the requirements and selecting the best fit is always possible.“Creating internal pipelines of talent is the optimal way to tackle skills shortages in the long run – it will allow employers to recruit the best junior talent and retain them into more senior and technical roles, without having to offer inflated salaries to attract new talent."Conversely, employers should also be aware that when candidates venture into the market looking for new employment, they will demand higher pay than they would from their current employer.”

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