Skills shortages made worse by spiralling house prices

2004

Nearly nine out of ten UK organisations experienced difficulties in recruiting suitable staff over the past year, according to new research, with rising house prices only making matters worse.

A survey of 976 employers by the Chartered Institute of Personnel and Development (CIPD) found that 85 per cent claimed to have suffered hiring problems.

Seven out of ten (69 per cent) reported difficulties finding people with the right specialist skills while two-thirds (66 per cent) could not find people with the right experience.

Around four per cent said that recruitment problems had forced them to relocated part of their business overseas.

As a result, more than four out of ten (43 per cent) of organisations say that they are increasingly employing people who they believe will the capacity to grow into the role, meaning that they are also placing a greater emphasis on training and development.

But as this week’s research from consultancy SHL and think-tank The Future Foundation demonstrates all too clearly, this approach often fails in practice.

It suggests that it takes almost eight months for a UK employee to reach a reasonable level of performance in a new job, with managers spending a quarter of their time dealing with poor performers. Yet one in eight people leave their jobs before even getting to this point.

Moreover, SHL says that one in five businesses claim that half the people they recruit don’t work out in the long term, with a further thirty per cent stating that one fifth of all new employees are not up to the job.

The CIPD’s report paints a similar picture, with three-quarters (77 per cent) organisations saying they also face difficulties in retaining staff, a five per cent increase on the same figure for 2003.

The response of many organisations to these problems has simply been to offer staff more money. More than a third (37 per cent) of firms said that they are increasing starting salaries or benefits packages while a similar number (34 per cent) said that keeping up with inflation and salaries was a worry.

According to the CIPD’s Rebecca Clake, these figures can only mean that wage inflation is set to continue.

“With nearly two out of five organisations increasing starting salaries or benefits packages in response to recruitment difficulties, wage inflation looks set to be a continued feature of the tight labour market,” she said.

An additional - and potentially very significant - factor that emerges from the research is the impact on the UK labour market of spiralling house prices, particularly in the public sector.

Three quarters of public sector employers said that they had experienced applicants turn down job offers because they could not afford to live in the area, with half of other employers similarly affected.

Rebecca Clark added: “Employers need to continue to employ a variety of tactics to attract and retain staff, the government must also play its part by encouraging some of the record numbers of economically inactive people back to work.”