Recruitment and retention of skilled staff will prove a real headache for many organisations in Britain over the next year as levels of employment rise and shortages start to bite.
The predication, which comes in a New Year review of HR prospects by the Chartered Institute of Personnel and Development (CIPD), is based on the expectation that employment levels will rise by 250,000 over 2004.
Nine out of 10 organisations attempting to fill vacancies reported difficulties in 2003 - a sharp increase on the 2002 figure of three quarters - with almost three quarters also reporting retention difficulties. The most common reasons for recruitment difficulty are skill shortages and finding applicants with suitable experience (cited by just over half of organisations).
The CIPD argues that further recruitment pressure will present a huge dilemma to UK organisations who are already experiencing severe recruitment difficulties. Either they will have use under-used sources of labour, such as immigrants or jobless people, or face wage costs increases over the next year.
According to John Philpott, the CIPD's Chief Economist, the self-employed and the public sector are likely to be the biggest winners.
"While this is undoubtedly good news for business and users of public services, it promises to present an even greater challenge to public sector HR managers who already report recruitment difficulties," he said.
"To meet the challenge, UK organisations should tap into under-used sources of labour - immigrants as well as jobless people, or indeed raise productivity by improving skills in the workplace, to avoid a hike in wage costs in 2004."
Philpott argues that the more balanced pattern of economic growth will also favour job creation in business services and manufacturing, although it remains doubtful in the case of the latter whether the net effect will be positive.
"The pressures of a tight labour market and business upturn will challenge the increasing proportion of organisations with a written HR strategy to deliver on their strategic goals if they are to remain credible," Philpott continued.
"Poor administrative processes and weak measurement of the added value of good people management, and costs of its neglect, as revealed consistently by our surveys, will be key issues for HR professionals over the next year."