The CIPD have released their latest Labour Market Outlook report covering the expectations of public, private and voluntary sector employers for 2021.
In a nutshell, employers who are planning redundancies is reducing, recruitment is looking more positive and there is likely to be an average increase in pay of circa 1.5% for private sector employees in 2021.
The number of employers who are planning redundancies in 2021 has dropped significantly from the summer of 2020 (perhaps unsurprisingly) from 33% down to 20%. The narrative behind this may be the impact of most employers tackling the right sizing of their organisations at the end of the first period of furlough.
The headline number here is that 56% of employers are considering recruitment in Q1 2021, this up slightly from the summer by 7 points, suggesting that employers are not resting on their laurels and their is activity in the labour market, but volumes are still reduced. Balancing this is the increase in unemployment (specifically those under 25 years of age) and the quoted reduction in European workers of circa 750,000, suggesting that organisations will still continue to face skill shortages going forward making recruitment for skilled roles more competitive. 57% of employers quote they have hard to fill vacancies.
For private sector employers they are anticipating increasing pay by an average of 1.5% in 2021, up from 0% in 2020, by contrast the public sector have reduced their expectations from 2% in 202o to 0% in 2021, possibly reflecting the likely impact of any Government spending review taking place this year. 72% of employers are anticipating a pay review to take place this year. Reflecting on 2020, of the 56% of employers who did do a pay review last year, the average award was 2%, so whilst the number of employers expecting to give an increase has gone up – the overall increase is more subdued than last year.