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Cautious approach to pay the 'new normal' – CBI/Harvey Nash

The private sector jobs recovery is continuing, but firms are increasingly taking a cautious approach to pay as they look to stay competitive. That is according to a survey by the CBI and recruitment specialists Harvey Nash, out today.

"Importantly, the roles that are being filled are in growth-generating jobs such as sales and customer service, while companies’ key recruitment targets for the next six months are those with professional and managerial experience. This confirms a story of employers seeking out new growth opportunities and seizing them as and when they arise.

Video: Katja Hall, CBI chief policy director on the Employment Trends Survey
Video: Albert Ellis, Harvey Nash CEO  on the Employment Trends Survey

“Where companies can't find the skills available, they're searching for potential and looking to invest themselves. The graduate market remains competitive, but 22% of employers are looking to increase the numbers that they take on this year, with the figure increasing to 27% for apprentices. This kind of long-term planning suggests that companies know they'll need to compete on their skills base if they are going to prosper."

On employment regulation, the survey shows that two-thirds (67%) of firms perceive it to be the biggest threat to labour market competitiveness.

Nearly half of firms have been affected by the introduction of the Agency Workers Directive in October 2011, and of these, nearly six in ten firms have reduced their use of agency workers, preferring to employ temporary workers on fixed-term contracts or to use other temp models.

Meanwhile, the employment tribunal system is the single biggest deterrent to firms looking to hire, with a 58% increase in claims over the past five years.

Katja Hall, CBI Chief Policy Director, said:

"Employment law is now seen as a brake on competitiveness by two-thirds of firms, and 52% expect new rules from Brussels to prove damaging in the next five years.

“The Agency Workers Regulations are a case in point, with half of respondents indicating that they've been affected by their introduction, and with 57% reducing their use of agency temps as a result, hurting job creation in these tough times.

“While some degree of flexibility has been maintained through other methods, the survey shows that the overall effect of these unwanted and unnecessary regulations is to reduce opportunities for people to find employment. Alleviating these damaging effects should be an issue of the highest priority for the Government, starting with working in Brussels to get rid of the directive entirely.

“Employment regulations themselves can be a barrier for firms, particularly smaller ones, but the number one issue for businesses is how the rules are applied in tribunals.

“While reforming collective redundancy and TUPE rules will help, a real game-changer for growth would be a radical reform of employment tribunals.

“With an ever-growing backlog of claims, it's clear that change is essential, and the Government’s laudable attempts to make progress on this front are being defeated by the inertia of an overly legalistic system. More radical reform has to come, to make the system quicker, cheaper, and more consistent for its users.

"The CBI believes there is a case for taking tribunals out of the court system and re-establishing them as more informal, swifter hearings, with judges ensuring cases are heard quickly and effectively.”

Note to Editors:

1. The Spring survey is the first CBI/Harvey Nash Employment Trends Survey of 2012, currently in its fifteenth year. Conducted between February and April 2012, there were 319 respondents. Respondents were based across the UK and represented a wide range of company sizes and sectors.

2. The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world.

3. Harvey Nash, a global professional recruitment consultancy and IT outsourcing service provider, is committed to delivering the very best talent and IT solutions to a broad base of international clients. The Group is a trusted advisor to some of the world's leading business, governments and institutions. Operating from 35 offices covering the USA, Europe and Asia, its talented professionals pursue the highest levels of integrity and quality in providing a unique portfolio of services: executive search, interim management, IT and finance recruitment and IT outsourcing.