Over a quarter (28%) of UK firms expect to increase headcount next year, and 15% of these companies say the increases will be significant. The picture is similar in the US and much of Europe, according to a PwC survey of HR directors in 1,100 companies across Europe and the US, including 589 organisations with more than 1,000 employees. The UK sample included 12 of the FTSE 100.
The number of British businesses expecting to create new jobs has more than doubled since last year's survey, when just 13% of companies planned to make increases. Conversely, the number planning cuts has shrunk from an alarming 43% in 2009 to just 16% this year.
Retention resurfaces as a challenge
Michael Rendell, head of HR services at PwC explained that this turnaround showed a confidence that economic growth will continue, despite political uncertainty around the world and the sovereign debt crisis. He expects demand to be particularly high among services, technology and manufacturing industries.
"For organisations to meet their headcount targets, retaining employees will be just as important as finding new hires”, says Rendell. This is because the loyalty of many workers will have been severely tested during the last two years, and will be challenged further as the job market picks up. He reminds employers that identifying how best to reward and motivate these individuals should be the top priority, and will remain challenging, given the pay constraints in many businesses.
Finding the right people to fill new positions also looks likely to prove difficult, with skills shortages representing the greatest challenge for 41% of respondents across Europe and US, making it the top HR concern. Skills shortages are particularly significant for UK firms, with 53% of respondents ranking this the biggest challenge, compared with 27% of US companies.
Learning and development issues
According to Rendell, the UK “has lost its position as the world's most educated workforce, which is particularly worrying as we come out of the recession and may limit future growth”. He thinks that companies need to take a more systematic approach to learning and development, identifying the skills they need for particular roles and training staff accordingly. Training spend, he says, should be treated with “the same rigour as any other capital investment, with appropriate due diligence and evaluation. Moreover, employers need to do more to ensure people have the right skills when they start their careers, and partnering with universities and schools may help achieve this goal.”
Global mobility
The other major challenges for the companies surveyed include global mobility and employment laws , which were the top concerns for 34% and 23% of UK employers respectively. The immigration cap has caused problems for UK employers, says Rendell. He explains: “the government has proposed to remove the limit on intra-company transfers who earn more than £40,000, those individuals earning between £24,000 and £40,000 will be restricted to one year stays. It does not make economic sense for businesses to bring people into the UK for less than two years so this limit poses a serious threat to the flexibility of the UK’s labour market.”
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