UK public sector employment confidence at 12-year high

An increase in hiring intentions among public sector employers looks set to support further employment growth in the UK, and women are expected to benefit from increased opportunities. That’s according to the latest Labour Market Outlook report from the Chartered Institute of Personnel and Development (CIPD) and The Adecco Group.

The quarterly survey shows that, in a reversal of the trend over the past decade, public sector employment growth is expected to increase in line with the private sector for the first time since 2008.

The increase in employment confidence in the public sector coincides with a number of pledges by the new Government to boost investment in public services. Women already account for around two thirds of the public sector workforce, suggesting that increased hiring by public sector employers will further boost the number of women in work.

Overall, the report shows that employer demand for labour remains strong. The report’s net employment score – a measure of employment confidence in the next three months – has remained strongly positive at +22, compared with +21 the previous quarter, with increased employment confidence in the public sector compensating for a fall in the private sector.

The net employment score in the public sector – the proportion of employers expecting to increase rather than decrease total staffing levels – increased for the second quarter in a row from +14 to +21, while net employment intentions in the private sector fell from +25 to +21.

Other key findings of the report, which is based on a survey of more than 1,000 employers, include:

  • Employment confidence has fallen relatively sharply among manufacturing employers, down from +22 to +6.
  • Strong public sector employment recovery is broad-based, with public administration, healthcare and education all predicting strong growth.
  • Overall median basic pay award expectations in the next 12 months remain at 2%, suggesting that pay growth is likely to remain consistent with recent trends.

Challenges to crucial public services

Gerwyn Davies, Senior Labour Market Adviser for the CIPD, said: “After more than a decade of contraction and pain, the public sector is now very much part of the good news employment story. The recent recovery in public sector employment is undoubtedly one of the key reasons behind the recent strong gains in the female employment rate, and this looks set to continue in the near to medium term.

“However, we should not lose sight of the net loss of more than 300,000 jobs in the public sector since 2010 and the challenges this has presented public service employers and employees in delivering crucial public services. Public sector organisations must prioritise managing and developing their workforces to empower and motivate existing public service employees, not just increase headcount.”

“Still evidence of hard-to-fill vacancies”

Alex Fleming, Country Head and President of Staffing and Solutions, the Adecco Group UK and Ireland, said: “The increase in public sector employment confidence is very positive for our labour market and shows that demand remains strong, despite the recent times of political uncertainty.

“The report’s findings also suggest that the number of women in work is likely to continue to rise which is promising, as a strong focus on diversity and inclusion is proven to be highly beneficial to organisations. However, there is still evidence of hard-to-fill vacancies, with 38% of organisations saying they have been prevented from filling a permanent role in the last 12 months. It’s therefore important that organisations continue to focus on developing and upskilling their employees through training and apprenticeships, to not only help tackle recruitment challenges, but also create a working environment where all talent can develop and thrive.”

Further highlights from the report

Sector differences

In terms of subsectors, confidence is highest in healthcare (+28), construction (+27) and the voluntary sector (+23). Meanwhile, net employment intentions among manufacturing employers have fallen from +22 to +6 over the past three months.

For the first time in more than a decade, employment intentions across the private, public and voluntary sector have converged, with all three sectors showing a net employment intention score between +21 and +23.

Skills shortages

Reflecting the current tightness of the labour market, around two-thirds of employers (64%) who have vacancies report that at least some of these vacancies are proving hard to fill. In addition, almost four in ten (38%) employers report being unable to fill a permanent vacancy during the past year, with roles in healthcare, engineering, teaching and IT being the most prevalent.

Around a quarter (24%) of all employers have increased investment in skills in the last two years to address hard-to-fill vacancies. One in five (19%) have offered more apprenticeships, rising to 29% among public sector employers. This suggests that the Apprenticeship Levy may be acting as a catalyst for more activity.

Pay predictions

Meanwhile, overall median basic pay award expectations for the next 12 months (to December 2020) remain at 2%, driven by employers matching inflation (43%) and movement in market rates (35%). Other reasons include recruitment and retention pressures (29%) and affordability (28%). Employers only able to offer less than 2% cited affordability (30%), public sector pay restraint (26%) and absorbing labour market costs such as the National Living Wage (21%) as factors inhibiting pay growth.

Are skills shortages making it difficult for you to fill certain vacancies in your organisation? For helpful hints on recruiting the people you need, email me or call me on 020 7099 2621.