IMPROVING employment prospects will lead to the creation of half a million new jobs in the next 12 months, according to a report by ICAEW and Grant Thornton.
An increase of 2.2% is expected in employee numbers over the coming year, which equates to 450,000 new jobs in the private sector, with SMEs leading the way in terms of planning on taking on new staff.
There is also added pressure on wage growth as salaries start to match inflation, with increases planned of 2.2% and staff turnover becoming more of an issue, the report found.
“This growth, if realised, would take UK employee numbers further into new all-time highs,” said Scott Barnes, CEO of Grant Thornton UK.
“We need to ensure that the right mix of jobs is being created in industries which offer the UK a competitive advantage over other economies; and that tomorrow’s workforce is being appropriately trained and encouraged to take on these new opportunities.”
The latest UK Business Confidence Monitor reached a record high in the second quarter of 2014, up to +37.3 from +37.2, as the economic recovery becomes more solid and businesses prospects more optimistic.
Despite an increase in confidence, over half of businesses are still operating below capacity with big differences depending on sector. Two thirds of manufacturing and engineering companies have spare capacity compared to 40% in the banking, finance and insurance sector.
Skill shortages are also becoming a greater issue compared to a year ago. This is especially prevalent in the construction industry with the availability of skills becoming a major issue.
“There is a real concern amongst business owners that they will not be able to recruit employees with the right skills. This is a real threat to the sustainability of the recovery,” said Michael Izza, chief executive of the ICAEW.