Austerity Britain seems to have gone on for a long time and there are many who still complain it continues. But in reality the ‘feel good’ factor is back.
Consumer confidence is high; wages are now well ahead of inflation month on month and unemployment continues to fall and is around the lowest level in Europe. All this means that the ‘Misery Index’ (invented by an American economist and arrived at by adding together the unemployment rate [5.7%] and the inflation rate [0.3%]) at 6% is the lowest it has been since the late 1960s.
Confidence levels are higher than they have been for a decade.
Is all of this good news for the employment market? The Recruitment & Employment Confederation in its latest report noted that permanent and temporary employment is increasing strongly and salaries are rising at a ‘marked’ pace across a range of sectors. The report went on to say that skill shortages are to be found in: engineering, construction, medical, executive and professional roles.
Economic forecasters are suggesting better news with further falls in unemployment, no early signs of increases in Bank Rate, continued low inflation although rises are expected as the year progresses and pay rises continuing to exceed the rate of inflation. On this basis the ‘Misery Index’ will continue to lessen.
The big question is whether the feel good factor will promote improvements in productivity to pay for pay growth and improve competitiveness. We all hope so, but then I return to growing shortages of key skills needed to power up productivity. If business cannot secure the talent it needs, then it is unlikely it will take advantage of the favourable economic environment. On the other hand if business is prepared to ‘buy’ talent with higher than market rate salaries, it might secure short term gain but have to face the prospect of longer term pain either by having to increase the pay of existing staff so increasing costs or lose them to competitors.
The time is right to have a good human resources strategy in place in order to ensure the people factor aligns with business aims and the time may be right to use recruitment agencies, not just to find the necessary talent, but to determine sensible reward packages which will attract the talent needed.
Dr Hugh Billot
HR GO Group of Recruitment Companies
HR GO Recruitment offers solutions to all your staffing needs, temporary and permanent, please call 0845 130 7000
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