Posted on 27th May 2021

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UK employers are the most optimistic about jobs in eight years, according to the latest CIPD/Adecco Labour Market Outlook report. The survey shows that all sectors are experiencing a jobs recovery, alongside an improvement in pay prospects.

The quarterly report's net employment intentions balance, which measures the difference between the proportion of employers expecting to add jobs and those planning to cut them, has risen sharply to +27 for the second quarter of 2021, compared with +11 in the first quarter of the year.

Strong employer optimism is evident across all three major sectors of the UK economy, including the private sector (+28), voluntary sector (+28) and the public sector (+22). It means employment intentions are stronger than at any time since the February 2013 report when this measure was introduced. This optimism has carried through to all sub-sectors, including hospitality and retail, which points to a strong and broad-based employment recovery.

The report, which surveyed more than 1,000 UK employers, also offers good news on pay, with basic pay expectations set to increase from 1% to 2% in the next 12 months. Median basic pay expectations in the private sector have increased from 1.5% to 2% on the previous quarter. By comparison, median basic pay expectations in the public sector in the next 12 months stand at 0.9%, which points to a re-emergence of a two-speed pay market between public and private sector workers.

Gerwyn Davies, Senior Labour Market Adviser at the CIPD, the professional body for HR and people development, comments: "More jobs and improved pay prospects should give us all reason to cheer, but a solid jobs recovery must be focused on better jobs, not just more jobs. To offset the emerging threat of recruitment difficulties, employers should be reviewing not just their recruitment practices, but also the quality of work they offer - such as employment conditions, the possibility of promotion, training opportunities and the right balance of flexibility and security. There's more to good work than raising wages.""

The survey also found that redundancy and recruitment intentions have returned to pre-pandemic levels this quarter:

- The proportion of organisations planning to recruit in the three months to June 2021 has risen to 64% - the highest level since the February 2020 Labour Market Outlook.

- Strikingly, there has been a sharp increase in hiring intentions among the worst affected sectors during the pandemic. For example, over two-thirds (66%) of hospitality firms plan to recruit in the second quarter of 2021, up from a third (36%) in the first quarter of 2021.

- The proportion of employers intending to make redundancies continues to fall. Just over one in ten (12%) expect to cut jobs during the next three months, down from 20% in the previous quarter. This is consistent across all three sectors of the economy.

Alex Fleming, Region President of Northern Europe at Adecco, comments: "It is really encouraging to see that all indicators of recovery are positive in this quarter's Labour Market Outlook, as we continue working towards the new era of work.

"The net employment intentions balance across all sectors is at its highest level since winter 2013, but the disruption of Brexit, paired with the lingering threat of COVID-19, means that now more than ever, organisations must remain committed to levelling up and building back better.

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