Dianne Sharp: The skills gap is the biggest threat to continued growth

Regional director of CBI says that economic growth needs to benefit more people, but that flexibility in the labour market is key

Dianne Sharp
Dianne Sharp

This year half of British businesses expect to create jobs and grow their workforce in every part of the UK, with permanent jobs created at a faster rate than part time positions.

The latest CBI/Accenture survey, Growth for Everyone, reports on business opinion across a range of employment issues.

In keeping with the trends reported in 2014, private sector jobs growth is expected to continue in 2015 with half of firms planning to take on new recruits. Jobs growth is predicted across the UK – with Scotland leading the way, closely followed by the North West. The outlook for young people is also looking brighter as firms plan to boost their graduate in-take and expand apprenticeships.

This was underpinned by the latest Labour market data published last week. The UK’s flexible labour market has continued to support more people into work. The number of people in employment rose by 37,000 in the three months to November 2014. This was the slowest increase since mid-2013, but persistent job creation over the last few years means that the number of people in work is now at a record high.

Continuing recent trends, the rise in employment was driven wholly by more people working for an employer (compared to, for example, self-employment). In the three months to November 2014 there were 80,000 more employees than in the preceding quarter. The North East had both the second largest increase in employment and decrease in unemployment, a trend that is beginning to nibble away at the unemployment rate gap between our region and the rest of the country.

For the first time, however, in the survey’s 17-year history, concerns about skills have overtaken employment regulation as the most significant threat to workforce competitiveness and is expected to remain so for the near future.

The survey also reveals that, although most employers expect pay rises at or above retail price inflation (RPI) in 2015, a cautious approach to pay will continue to be the order of the day, reflecting weak productivity and an increasingly competitive business environment.

Ensuring growth works for everyone will remain a challenge as economic growth continues to bed in over 2015. Long term issues such as productivity and education need to be tackled, and the flexibility of the UK labour market needs to be protected, if businesses are to help people get into, and get on in, work.

Dianne Sharp, Regional director - North East, CBI

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