Archives For December 2014

CIPD logoThis year delivered growth but 2015 must be a year of productivity to sustain growth and improve earnings, says CIPD.

The UK labour market will continue to expand at a strong rate in 2015 but it’s unlikely that we’ll see any real increase in wage growth until 2016, according to Mark Beatson, chief economist for the CIPD, the professional body for HR and people development. While improvements in the labour market are good news for jobseekers and good news for businesses, Beatson warns that the UK’s steady growth remains vulnerable to developments in Europe and that the UK’s ‘productivity puzzle’ is an urgent issue for policy makers and businesses to address in order to sustain growth.

In his annual analysis of the UK labour market for the year ahead, published today, Beatson predicts:

• Employment may grow by as much as half a million in 2015, slightly more than the OBR forecast. This is due to the extra number of migrant workers seeking work, older workers looking to stay in work to strengthen their pension pots and more people leaving benefits and going into jobs under the Welfare to Work programme
• Economic growth of around 2.4% is expected in 2015, slightly lower than in 2014
• The Eurozone as a whole is still expected to grow by just 1.1% in 2015
• Interest rates are expected to rise but any increases are likely to be small
• Wage growth is likely to remain in the 1-2% range for most or all of 2015, although low inflation means average earnings may increase slightly in real terms. However, no significant increase in wage growth can be expected until 2016, and even then, it is not guaranteed
• Productivity needs to form the core of economic policy and employers need to raise their productivity – including developing their workforce – before skills shortages mount.

Beatson comments: “By historic standards 2014 has been a year of reasonable growth, but there are still some very significant challenges that the government needs to address around productivity. We said at the start of 2014 that productivity needed to be at the top of the agenda for Government and the same is true for this year. As a country we are still producing less value today than before the recession, and the years preceding that. We need a massive step-change as without growth in productivity, we are unlikely to see real earnings grow for some time”.

Beatson warns that while hiring intentions remain positive, at some stage labour shortages will start to become more acute and that taking advantage of relatively cheap labour now could have an impact on business competition, particularly in international markets. In both cases, he suggests that employers can manage these risks by investing in productivity. This might include investments in capital equipment such as technology and machinery as well as investing in intangible assets, including people.

He continues: “Upskilling the existing workforce is an insurance policy against future skills shortages, but these efforts will only be maximised through broader changes such as improved management practices and job design. We need to see a similar focus from policy makers. Higher productivity is necessary if living standards are to improve and economic policy in the next Parliament should focus on achieving it through creating an environment that supports productivity growth at a sector and local level.

The UK’s productivity challenges are deep-rooted and require systemic change. We need government, employee representatives and business to come together and pinpoint where workplace practices are working, where they need to be challenged and how we can build a workplace of the future that really works and drives the productivity we need.”

The CIPD has recently published research which pinpoints the role of effective management in the workplace and how this contributes to business productivity and organisational resilience. ‘Megatrends: are UK organisations getting better at managing their people?’ View research here.

The predictions report is available to download here.

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CIPD welcomes renewed focus on careers support for young people

Responding to the new careers body announced by the Government on 9 December 2014, Katerina Rüdiger, Head of Skills and Policy Campaigns at the CIPD, the professional body for HR and people development, said:

“Far too often we hear that young people aren’t prepared with the right skills or awareness of the complexities of working life. Strong careers advice can help to close the gap between education and the world of work, but our latest research has found that just a third (35%) of parents are satisfied with the quality of careers advice and guidance provided in their child’s school or college.

“Supporting young people to navigate the increasingly complex world of work, and to find jobs and fulfilling careers is a critical part of securing the long-term competitiveness of the UK economy. The Government’s decision to invest more in careers advice, and to embed significant input from employers in the process, is a welcome step in the right direction and good news for young people and for businesses. It will help to ensure young people are getting the best possible start in the world of work and businesses are building a strong pipeline of talent for the future.

“The new body does not start with a blank canvas. There are many initiatives that are already delivering good results, and should be supported and enhanced by the new body. From experience, we know how valuable routes into work such a mentoring, apprenticeships and work experience can be both for young people and for the employers that provide them and would urge for greater investment in encouraging links between schools, colleges and employers.”

The CIPD is firmly committed to increasing employer engagement with young people. Through its Learning to Work campaign, the CIPD provides employers with the insights and practical guidance they need to offer more access routes for young people and make their organisations more youth-friendly.

In June 2013 the CIPD furthered this commitment by launching a formal partnership with the Inspiring the Future initiative to get HR professionals into local state secondary schools and colleges to help students with their CVs, conduct mock interviews and deliver careers insight talks. Over 2,000 CIPD members have signed up to the initiative, providing support to thousands of young people throughout the UK. CIPD members can also provide support through Steps Ahead Mentoring which offers young people, most of whom have never worked before, six one-to-one mentoring sessions with CIPD members to help them improve their employability skills, boost their confidence and find work. Young jobseekers (aged 18-24) are referred to Steps Ahead by Jobcentre Plus advisers, and other selected partners. To date, 73% of those who have completed the programme go on to find work or work experience.

Rüdiger adds: “Our schemes highlight the value of HR professionals and employers taking an active role in helping young people into work. We believe that businesses need young people as much as young people need jobs. Through our Learning to Work programme we’re working hard to champion better work and working lives, which starts with young jobseekers having the support and opportunities they need to access the labour market.”

Source: CIPD