As the UK’s economic forecast continues to improve, both workers and businesses are experiencing a boost in confidence which has led to not only an increase in available positions but also a leap in the fluidity of the country’s workforce. Yet surprisingly, big business recruitment programmes have taken a back seat in the ongoing labour market recovery, with small firms at the helm of job creation.
According to new research by recruitment firm Michael Page, the outlook for small businesses remains strong in terms of continuing to create roles in regional areas. The poll of 4,000 of the firm’s clients shows that almost half of SMEs surveyed plan to expand their workforce in the coming months, fuelling demand for commercial property as small firms expand.
Unsurprisingly, this trend is even more pronounced in the country’s prominent business hubs, with 40 per cent of small companies in the South East engaging in active recruitment drives in the first quarter of the year. However, bigger firms in the area do not share this enthusiasm for staff expansion, with only 20 per cent seeking new employees.
For those choosing to begin hiring in the near future, attracting professional services staff is the priority for 60 per cent of small businesses. In part, this is due to the fact that industries such as motor vehicle, manufacturing and construction are leading the push for recovery – all areas in which highly skilled workers are required.
Unfortunately, while the rise in employment opportunities is certainly good news, financial experts have warned that a more balanced recovery is required in order to improve the economy in the long term. According to the EY Item Club of forecasters, the Bank of England’s much debated interest rates rise trigger of 7 per cent unemployment is quite likely to be reached this year, but this could pose its own set of problems.
The key issue, in a nutshell, is the fact that real wage growth remains relatively low – something that will have to be taken into account when setting the new interest rates for a post-recession era. Chief economic adviser Peter Spencer believes an increase in pay is essential in order to continue the momentum of recovery and ease debt pressure upon families.
He says; “It is hard to find another episode in time where employment has been rising and real wages falling for any significant period of time.
“The weakness of real earnings is proving to be the Government’s Achilles’ heel and could prove to be the weak spot in the recovery.”
As a result of this, the EY Items Club believes that the Bank of England’s Monetary Policy Committee may reassess the wisdom of increasing interest rates even if the unemployment rate hits 7 per cent this year. Instead, it believes that issues such as wage growth, business investments and exports will play a greater role in determining the financial future of the UK.
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