OUTLOOK LABOUR MARKET - Summer 2021 - CIPD
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LABOUR MARKET OUTLOOK VIEWS FROM Summer 2021 EMPLOYERS
The CIPD is the professional body for HR and people development. The registered charity champions better work and working lives and has been setting the benchmark for excellence in people and organisation development for more than 100 years. It has more than 150,000 members across the world, provides thought leadership through independent research on the world of work, and offers professional training and accreditation for those working in HR and learning and development.
Labour Market Outlook Summer 2021
Report
1
Labour Market Outlook
2 Summer 2021
3
4
5
Contents
6
1 Foreword from the CIPD 2
2 Key points 3
3 Recruitment and redundancy outlook 4
4 Job vacancies 9
5 Pay outlook 10
6 Survey method 12
1Labour Market Outlook Summer 2021
1 Foreword from the CIPD
1
The quarterly CIPD Labour Market Outlook aims to provide an early indication of future
2 changes to the labour market around recruitment, redundancy and pay intentions. The
findings are based on a survey of more than 2,000 employers.
3 There was a time when we could gauge the extent of the economy’s reopening by the
furlough statistics. At one point, almost 9 million people (about 28% of those employed)
were on furlough.1 Employers could quickly adjust to changes in demand by bringing
4 workers on or off furlough, and they did. We saw dramatic drops in the numbers
furloughed with the easing of COVID-19-related restrictions and similarly sensational rises
5 as restrictions were re-imposed. However, the latest surveying by the Office for National
Statistics (ONS) shows that in late June 2021, approximately 5% of the workforce was
on furlough, the lowest proportion since the Coronavirus Job Retention Scheme began.2
6 The ability to flex the workforce using furlough is gradually waning and, in response,
recruitment is picking up.
This report shows that employers are pulling out all the stops to get the workforce they
need to meet demand. Having mostly exhausted the massive contingent workforce that
existed on furlough, they are now opening recruitment as well as focusing on retention
by reducing redundancies. Encouragingly the most popular response to hard-to-fill
vacancies is to focus on upskilling existing staff.
It is worth reflecting on just how dire things seemed this time last year when many of
the metrics in this report reached their lowest ebb. Economic forecasts made for grim
reading, but with the relatively successful vaccine rollout and the roaring success of
furlough in saving jobs and maintaining capacity in the economy, forecasts have been
revised. Successive revisions to unemployment forecasts have seen the peak squashed
down from a figure in similar territory to the post-financial crisis (a painful 7.5% in the
Office for Budget Responsibility’s November 2020 forecasts)3 to a much more modest
5.5% (Bank of England’s May 2021 forecasts).4 The Bank of England is expecting the
economy to be back to its pre-pandemic size by the end of this year.
The expectations of employers for the following three months as laid out in this
report confirm these forecasts. Employers expect a swift summer
reopening and return to normality. Anxiety about mass job losses
has been replaced with the opposite fear for employers – namely, an
inability to recruit enough of the right staff. The median employers’
expectation of basic pay settlements has held at the 2% level
reached last quarter, after four consecutive quarters at 1%. Some
sectors could see higher figures still if recruitment difficulties persist.
Jonathan Boys, CIPD Labour Market Economist
1 HMRC. (2021) Coronavirus Job Retention Scheme statistics: 1 July 2021. London: HM Revenue & Customs.
2 ONS. (2021) Business insights and impact on the UK economy: 15 July 2021. London: Office for National Statistics.
3 OBR. (2020) Economic and fiscal outlook – November 2020. London: Office for Budget Responsibility.
4 Monetary Policy Committee. (2021) Monetary policy report: May 2021. London: Bank of England.
2 Foreword from the CIPDLabour Market Outlook Summer 2021
2 Key points
1 +32
+27
• The net employment balance – which measures the
2 difference between employers expecting to increase
+11
staff levels in the next three months and those
expecting to decrease staff levels – has risen for the –8 –1
3 fourth consecutive quarter. At +32, it has reached its Autumn Winter Spring Summer
2020 2020/21 2021 2021
highest level since tracking began. Summer
2020
4 Net employment score recovery
5
6 • Recruitment is driving the balance upwards. The
proportion of employers planning to recruit in the
69%
three months to September 2021 has risen again
to 69%.
Recruitment continues to rise
33
30
• The percentage of employers looking to make 22
20
redundancies has settled around 13%. This
forward-looking figure suggests that the end of 16
furlough will be a relatively smooth transition 12 13
with minimal job losses. Winter Spring Summer Autumn Winter Spring Summer
2019/20 2020 2020 2020 2020/21 2021 2021
% of employers to make redundancies
• 51% of employers in the hospitality/arts/ 51%
entertainment industry report hard-to-fill
vacancies compared with 39% for all employers.
Hard-to-fill vacancies in hospitality
• After dropping to 1% growth for four consecutive
quarters during the pandemic, median basic pay
settlements have held at the 2% pre-pandemic level
reached last quarter.
2%
Overall median basic pay
settlements
3 Key pointsLabour Market Outlook Summer 2021
3 ecruitment and redundancy
R
1
outlook
2 The net employment balance measures the difference between the proportion of
employers that expect recruitment and redundancies to increase staff levels and those that
expect to decrease staff levels in the second quarter of 2021. With the onset of COVID-19 in
3 2020, the balance plunged into negative territory, but the recovery in employer confidence
since has been dramatic (Figure 1). For the third consecutive quarter, the balance is
positive. In fact, the balance grew from +27 in spring 2021 to +32 in summer 2021.
4
The net employment balance is +33 in the private sector, +30 in the voluntary sector and
5 +27 in the public sector (see Figure 1).
6 Figure 1: Net employment balance
35 33
32
30
27
25
15
Net employment balance
5
0
–5
Public sector
–15 Private sector
Voluntary sector
Total
–25
Au me 014
in n 14
Sp 201 14
Su ing /15
Au er 015
in n 15
Sp 201 15
Su ing /16
Au e 016
in n 16
Sp 201 16
Su ing /17
Au e 017
in n 17
Sp 201 17
Su ring /18
Au me 018
in n 18
Sp 201 18
Su in /19
Au e 019
te n 2 19
Sp 201 19
m g2 0
r 0
in n 20
Sp 02 0
Su ing /21
er 21
21
Su rin 9/2
Au me 02
r 2 02
W tum 20
r 0
m 20
20
W tum 20
r 0
W tum 20
r 0
W tum 20
r 0
W tum r 20
0
W tum 20
r 0
W tum 20
6
r 0
4
7
5
8
m 2
te 2
m 2
te 2
m 2
te 2
m 2
te 2
m g2
m 2
te 2
te 2
r
r
r
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m
m
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r
r
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in
Base: summer 2021, all employers (total: n=2,042; private: n=1,473; public: n=352; voluntary: n=217)
The balance has been driven up by a higher proportion of employers looking to increase
their staff levels (Figure 2). This is mirrored in official statistics, with vacancies registering
10% above pre-pandemic levels in the latest release.5 Like our employment balance,
vacancies are to an extent forward-looking due to lead times in recruitment. Meanwhile,
official statistics are also showing that redundancies have settled back to pre-pandemic
levels.6 At previous stages of the pandemic, employers have been able to flex the
workforce to meet demand by taking employees on and off furlough, resulting in dramatic
changes to numbers furloughed in response to easing of restrictions. This is becoming
more difficult to do as the proportion of the workforce on furlough decreases, meaning
that active recruitment is having to work harder.
5 ONS. (2021) Vacancies and jobs in the UK: July 2021. London: Office for National Statistics.
6 ONS. (2021) Employment in the UK: July 2021. London: Office for National Statistics.
4 Recruitment and redundancy outlookLabour Market Outlook Summer 2021
Figure 2: Composition of employment intentions in the quarter immediately before, and
quarters since, the onset of COVID-19 (%)
1 Decomposition of net employment balance (stacked bars) 100
5 5 6
10 7 7 6
90 11 9 8
15
2 80 22 29 25
70
50 46
3
60 53
50
50
49 45 44
40
4 30
20 40
32 33 36
27
5 10 19 21
5 24
0
20
20
20
0
21
21
1
02
6
02
0/
20
20
9/
20
2
2
02
01
g
er
n
g
er
rin
m
2
2
rin
m
m
er
er
tu
Sp
m
Sp
m
t
t
Au
Su
in
in
Su
W
W
Increase total staff level Maintain total staff level Decrease total staff level Don’t know
Base: summer 2021, all employers (n=2,042)
The net employment balance remains positive for all industries but is particularly high in
healthcare (+58), hospitality/arts/entertainment (+48) and IT (+41) (Figure 3).
Figure 3: Net employment balance, by industry (%)
Healthcare 58
Hotels, catering and restaurants/arts,
entertainment and recreation 48
Information and communication 41
Business services (for example consultancy, law, PR,
40
marketing, scientific and technical services)
Transport and storage 37
Administrative and support service
34
activities and other service activities
Voluntary 30
Construction 29
Public administration and other public sector 27
Manufacturing and construction 27
Manufacturing 25
Education 2123
Wholesale, retail and real estate 18
Finance and insurance 17
Base: For breakdown of base sizes, see Table 3.
5 Recruitment and redundancy outlookLabour Market Outlook Summer 2021
Recruitment intentions
The proportion of employers planning to recruit in the three months to September 2021
has risen again to 69% (Figure 4).
1
Figure 4: Recruitment intentions, by broad sector (%)
2
% of employers planning to recruit in the next three months
90
83
3
80
72
70
69
4 60
65
5 50
40
6 Public sector
30 Private sector
Voluntary sector
20 Total
Spring Summer Autumn Winter Spring Summer Autumn Winter Spring Summer
2019 2019 2019 2019/20 2020 2020 2020 2020/21 2021 2021
Base: summer 2021, all employers (total: n=2,042; private: n=1,473; public: n=352; voluntary: n=217)
The change in fortunes for some of the most heavily affected sectors is dramatic, with
hospitality/arts/entertainment moving from 26% of employers looking to hire in summer
2020 to 72% looking to hire in 2021 (Figure 5). Transport and storage is the industry with
the second biggest range, from 33% of employers looking to recruit in summer 2020 to
65% in summer 2021. Both these industries have been heavily affected by the pandemic
and immigration changes as a result of Brexit.
Figure 5: Recruitment intentions, by industry, summer quarters 2020 and 2021 (%)
20 30 40 50 60 70 80 90 100
Healthcare
Public administration
and other public sector
Education
Hotels, catering and restaurants/arts,
entertainment and recreation
Voluntary
Information and communication
Finance and insurance
Transport and storage
Administrative and support service
activities and other service activities
Manufacturing
Year
Business services (for example consultancy, law, 2020
PR, marketing, scientific and technical services)
2021
Wholesale, retail and real estate
Construction
20 30 40 50 60 70 80 90 100
% of employers planning to recruit in the next three months
Base: For breakdown of base sizes, see Table 3.
6 Recruitment and redundancy outlookLabour Market Outlook Summer 2021
Redundancies
The percentage of employers looking to make redundancies has settled around 13% in total
and for both the public and private sectors (Figure 6). This is in stark contrast to the total
1 figure of 33% in summer 2020.
2 Figure 6: Redundancy intentions, by broad sector (%)
40
3
35
4
% planning redundancies in the next three months
Public sector
30
Private sector
Voluntary sector
5 25 Total
6 20
15 15
13
10
5
0
Spring 2020 Summer 2020 Autumn 2020 Winter 2020/21 Spring 2021 Summer 2021
Base: summer 2021, all employers (total: n=2,042; private: n=1,473; public: n=352; voluntary: n=217)
Unsurprisingly it is hospitality/arts/entertainment with the lowest percentage of employers
looking to make redundancies (7%), closely followed by transport and storage (8%)
(Figure 7). Employers are not just looking to recruitment to ameliorate staffing difficulties.
Workforce size depends on flows in and out, and so employers are also focusing on
retention and cutting back on redundancies. While the range between summer 2020 and
summer 2021 is large for most industries, figures in healthcare and the public sector have
moved the least because their workforce needs have remained more consistent throughout
the pandemic.
7 Recruitment and redundancy outlookLabour Market Outlook Summer 2021
Figure 7: Redundancy intentions, summer quarters 2020 and 2021 (%)
1 0 5 10 15 20 25 30 35 40 45 50
Finance and insurance
2 Manufacturing
Healthcare
3 Voluntary
Wholesale, retail and real estate
4
Education
5 Information and communication
Construction
Business services (for example
6 consultancy, law, PR, marketing,
scientific and technical services) Year
Public administration 2020
and other public sector 2021
Administrative and support service
activities and other service activities
Transport and storage
Hotels, catering and restaurants/arts,
entertainment and recreation
0 5 10 15 20 25 30 35 40 45 50
% of employers planning to make redundancies in the next three months
Base: For breakdown of base sizes, see Table 3.
8 Recruitment and redundancy outlookLabour Market Outlook Summer 2021
4 ob vacancies
J
1
In Figure 8 we consider hard-to-fill vacancies. These are most prevalent in hospitality/arts/
2 entertainment, where 51% of employers had hard-to-fill vacancies, followed by healthcare
(49%) and manufacturing (47%).
3 Figure 8: Percentage of employers with hard-to-fill vacancies, by industry (%)
Hotels, catering and restaurants/arts,
4 entertainment and recreation 51 15
Healthcare 49 16 2
5 Manufacturing and construction 47 15
Voluntary 44 22 2
6 Information and communication 43 15 3
Public administration and other public sector 40 20
Total 39 16 2
Education 37 29 0
Construction 37 10 3
Finance and insurance 36 16 1
Transport and storage 36 14
Business services (for example consultancy, law,
36 12 2
PR, marketing, scientific and technical services)
Administrative and support service
35 14 2
activities and other service activities
Wholesale, retail and real estate 31 12 3
Yes No Don’t know
Base: For breakdown of base sizes, see Table 3.
When asked how they would deal with hard-to-fill vacancies, the largest category of
response was to upskill more existing staff (44%) followed by hiring more apprentices
(26%) (Figure 9).
9 Job vacanciesLabour Market Outlook Summer 2021
Figure 9: Employer plans to help alleviate hard-to-fill vacancies (%)
1 Upskill more existing staff 44
Hire more apprentices 26
2 Raise wages 23
Hire more UK graduates 20
3 Improve job quality 14
Nothing 14
4 Make greater effort to recruit older workers 11
Hire more EU nationals 11
5 Hire more non-EU nationals 10
Hire more school-leavers/FE college-leavers 10
6 Introduce or increase automation 9
Target under-utilised groups
(e.g. ex-offenders, long-term unemployed) 8
Other 7
Hire parent returners 7
Hire more ex-welfare claimants 3
Base: summer 2021, employers with hard-to-fill vacancies (n=710)
5 ay outlook
P
Over four-fifths (81%) of employers are planning a pay review in the next 12 months
(until June 2022). Among these employers, a third (33%) expect pay to increase, which is
significantly lower than spring 2021 (40%). Twelve per cent expect a pay freeze and just
1% expect a decrease. There continue to be high levels of uncertainty, however, with the
largest category of response at just under two-fifths (37%) reporting it is hard to tell and will
depend on organisational performance (Figure 10).
Figure 10: Employers’ expected direction of pay award (%)
40
37
% of employers who are planning
35 33
30
a pay decision
25
20 17
15 12
10
5
1
0
Decrease We will have Increase Hard to tell; Don’t know
a pay freeze it will depend on
our organisational
performance
Base: summer 2021, all employers planning a pay review in the next 12 months (n=1,585)
10 Pay outlookLabour Market Outlook Summer 2021
Just over two-fifths (41%) of voluntary sector employers are anticipating an increase this quarter.
Meanwhile, 32% in the private sector and 33% in the public sector are expecting an increase.
1 The expected median basic pay settlement is 2%, which is consistent with last quarter.
However, within the three broad sectors, the private sector has risen to 2.2% from 2% last
2 quarter, while public sector rises to 1.5% (from 0.9%) and voluntary to 2% (from 1.6%)
(Figure 11).
3 Figure 11: Average basic pay increase – median employer
2.5
4 2.2
2.0 2.0
Predicted annual basic pay awards (%)
5
1.5 1.5
6 1.0
Public sector
Private sector
0.5 Voluntary sector
Overall net
0.0
–0.5
19
19
19
19
20
20
20
20
21
21
21
0/
20
20
8/
20
20
20
9/
20
20
20
01
02
01
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er
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er
n
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Au
Su
in
Au
Su
in
in
Su
W
W
W
Base: summer 2021, all employers expecting an increase (n=524; private: n=353; public: n=99; voluntary: n=72)
Figure 12 looks only at those employers that are able to predict the direction of a future
pay review (so excludes the 37% who said it is too uncertain to tell right now).
Figure 12: Distribution of forward-looking pay changes (%)
35
30
30
26
25
% of employers
20
17
15
13
11
10
5
2
0 0 0 0 0
0
0+
+
9
9
9
99
e
9
99
99
99
ez
.0
.9
.9
.9
.9
4.
0.
2.
3.
0.
–3
–2
–1
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–4
fre
0–
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1–
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1.0
.0
.0
0.
y
2.
–0
–1
3.
–2
–3
Pa
Bands of pay change
Base: summer 2021, all employers who report an expected increase, decrease or pay freeze in the next 12 months (n=730)
11 Pay outlookLabour Market Outlook Summer 2021
6 urvey method
S
1
All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 2,042
2 senior HR professionals and decision-makers in the UK. Fieldwork was undertaken between
16 June and 12 July 2021. The survey was carried out online. The figures have been
weighted and are representative of UK employment by organisation size and sector.
3
Weighting
Rim weighting is applied using targets on size and sector drawn from the BEIS Business
4 Population Estimates for the UK and Regions 2019. The following tables contain unweighted
counts.
5 Table 1: Breakdown of the sample, by
number of employees in the organisation Table 2: Breakdown of sample, by sector
6 Employer size band Count Sector Count
2–9 469 Private sector 1,473
10–49 418 Public sector 352
50–99 174 Third/voluntary sector 217
100–249 189 Total 2,042
250–499 158
500–999 112
1,000 or more 522
Total 2,042
Table 3: Breakdown of sample, by industry
Industry Count
Voluntary 217
Manufacturing and production 310
Manufacturing 151
Construction 114
Primary and utilities 45
Education 189
Healthcare 139
Private sector services 1,028
Wholesale, retail and real estate 180
Transport and storage 53
Information and communication 104
Finance and insurance 153
Business services (for example consultancy, law, PR, marketing, scientific 246
and technical services)
Hotels, catering and restaurants/Arts, entertainment and recreation 108
Administrative and support service activities and other service activities 184
Public administration and defence 139
Police and armed forces 18
Total 2,042
12 Survey methodLabour Market Outlook Summer 2021
Table 4: Breakdown of sample, by region
Region Count
1 North-east of England 57
East Midlands 119
2 West Midlands 108
Scotland 142
London 345
3 South-west of England 166
East of England 126
4 Wales 91
South-east of England 279
North-west of England 179
5 Yorkshire and Humberside 123
Northern Ireland 19
6
13Chartered Institute of Personnel and Development 151 The Broadway London SW19 1JQ United Kingdom T +44 (0)20 8612 6200 F +44 (0)20 8612 6201 E cipd@cipd.co.uk W cipd.co.uk Incorporated by Royal Charter Registered as a charity in England and Wales (1079797) Scotland (SC045154) and Ireland (20100827) Issued: August 2021 Reference: 8162 © CIPD 2021
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