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Overview of CIPD surveys
A barometer of
HR trends and
prospects
2013
Chartered Institute of Personnel and Development
The CIPD is the world’s largest Chartered HR and development professional
body, with 135,000 members – including over 84,000 professional members.
Our members include the next generation of HR professionals and many of the
world’s most influential senior HR leaders from world-class organisations.
For the last 100 years we’ve been supporting HR to drive business performance.
We set the standards for best practice in HR and its specialisms. It’s our aim to
support and develop professional capability by shaping thinking, leading best
practice and building HR’s profile in business today, and for the next 100 years.
cipd.co.uk
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 3
Contents
A barometer of
HR trends and
prospects
2013
Findings from the 2012 surveys
– a human capital checklist for UK plc 	 4
Introduction 	 5
Resourcing and talent planning 	 6
Reward management	 9
Learning and talent development 	 11
Absence management 	 14
Employee outlook 	 17
Labour market outlook 	 19
The economy and labour market in 2013 	 20
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 4
Labour turnover 13%
Organisations experiencing recruitment difficulties 82%
Organisations experiencing retention problems 34%
The percentage of organisations that have a defined benefit (DB)
pension scheme (final salary or career average) 20%
The percentage of employees that report being under pressure once
or twice a week 41%
The percentage of employees that think it would be easy or very easy
to find a new job if they lost their current position 12%
Training hours received per employee 24%
Median annual training budget per employee £276
Organisations that anticipated the funding of learning and
development would increase in 2012 10%
Organisations that anticipated reductions in the funding of learning
and development in 2012 39%
Absence
7 working days
per employee
Cost of absence
£600 per employee
per year
Findings from the 2012 surveys – a human
capital checklist for UK plc
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 5
Throughout 2012 the Chartered Institute of
Personnel and Development (CIPD) surveyed every
changing aspect of the world of work.
This eleventh annual people management and
development barometer report is a compendium
of individual surveys drawing out common themes
and highlighting emerging trends. Alongside the
existing battery of annual CIPD surveys, the CIPD
produces a quarterly Outlook series that comprises
the CIPD Labour Market Outlook, a survey of
recruitment, redundancy and pay intentions among
HR professionals; and the CIPD Employee Outlook, a
snapshot of a random sample of employee attitudes.
The barometer report also looks ahead to the next 12
months with our annual employment forecast. The
CIPD forecasts that the UK labour market faces two
scenarios in the coming year. In the first scenario, the
labour market will continue on its current upward
trajectory, with employment levels continuing to
rise. In the second scenario, which is consistent
with the recent Office for Budget Responsibility
forecast, unemployment will rise by 100,000. As
the CIPD warned in summer 2012, some employers
may be forced to make redundancies in 2013 if the
growth prospects do not improve. Common to both
scenarios, employers will continue to focus on labour
costs, which will mean that salaries will fail to keep
pace with inflation for the fourth year in a row.
The report also reviews the suite of backward-
looking annual and quarterly surveys produced by
the CIPD. Some of the information in these surveys
thus relates to 2011 as well as 2012.
The summary of main findings can be read as a
baseline human capital report for UK plc.
Individual surveys looked at all the key issues facing
HR practitioners:
•	 resourcing and talent planning
•	 reward management
•	 learning and development
•	 absence management
•	 employee attitudes
Our surveys are drawn from relatively large sample
sizes and provide comprehensive coverage across all
sectors and sizes of organisation. Each survey report
is an invaluable source of benchmarking information
for practitioners and policy-makers. This ‘all in one
place’ compendium presents the main findings from
each of our 2012 surveys and outlines the challenges
facing HR practitioners in 2013.
Copies of the CIPD’s survey reports can be obtained
free from our website at: cipd.co.uk/surveys
 
Introduction
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 6
The number and nature of
vacancies
•	 On average the number of permanent vacancies
organisations attempted to fill in 2011 was much
lower than before the 2008 financial crisis.
•	 The number of vacancies in very large private
sector organisations fell during the same
period compared with the previous 12 months,
but increased slightly in small to medium
organisations. In contrast, large public sector
organisations report more vacancies, although
considerably fewer than in 2008.
•	 A fifth of organisations believe that the abolition
of the Default Retirement Age (DRA) will mean
they recruit fewer people.
•	 One in four organisations report that they have
reduced their use of agency workers since
October 2011 when the Agency Workers’
Regulations came into force.
Attracting and selecting
candidates
•	 While the effectiveness of methods to attract
applicants varies according to organisation sector
and size, the most effective methods overall
were reported to be through organisations’ own
corporate websites and recruitment agencies, as
was the case last year. However, the number of
employers using recruitment agencies has fallen
year-on-year for the past three years.
•	 The private sector, particularly manufacturing
and production organisations, were three times
more likely than public sector organisations to
include recruitment agencies among their most
effective methods for attracting candidates.
•	 Local and national newspapers were less frequently
ranked among organisations’ most effective
methods of attracting candidates compared with
previous years, while more consider apprenticeships
among their most effective methods.
•	 Labour turnover for all UK employees is 13%.
•	 Eighty-two per cent of organisations reported difficulty in filling vacancies, up from 75% in the
2011 survey.
•	 The median recruitment cost of filling a vacancy was £8,000 for senior managers/directors and
£3,000 for other employees, showing a modest increase compared with last year.
•	 The most frequently cited cause of recruitment difficulties was lack of specialist or technical skills
(59%).
•	 Around one-third (34%) of organisations report having no retention difficulties, down from
42% in 2011.
•	 One in four organisations report that they have reduced their use of agency workers since
October 2011 when the Agency Workers’ Regulations came into force.
(Respondents: 522 HR practitioners in UK organisations)
RESOURCING AND
TALENT PLANNING
2012
Annual survey report 2012
Executive summary
in partnership with
Resourcing and
talent planning
in partnership with
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 7
•	 Overall, one-third of organisations report that they
have reduced their use of recruitment partners,
although only a minority have stopped using them
and one in five have formed a closer business
partnership with them over the past year.
•	 The median recruitment cost of filling a vacancy
was £8,000 for senior managers/directors and
£3,000 for other employees (adjusting for
accuracy).
Recruitment difficulties
•	 One in three organisations report that the length
of their recruitment process has led to the loss of
potential recruits.
•	 Eighty-two per cent of organisations reported
difficulties in filling at least some vacancies
over the past few months, with all sectors (but
particularly the public sector) reporting more
difficulties compared with last year.
•	 There has been a step-increase (particularly in
the public sector) in the proportion reporting
difficulties in filling vacancies for senior
managers/directors.
•	 Managers and professionals and technical
positions were the most difficult vacancies to fill.
•	 As in previous years, the main reason for
recruitment difficulties was a lack of necessary
specialist or technical skills.
Employing younger workers
•	 A quarter of organisations report they are
employing more 16–24-year-olds compared with
one year ago.
•	 Nearly one-third of organisations operate a
structured graduate recruitment programme.
Their use has increased in larger organisations
compared with previous years as well as in the
manufacturing and production sector generally.
•	 Two-fifths of organisations are concerned that
the increase in university tuition fees will make it
harder to get the skills they need (rising to half of
those with graduate recruitment schemes).
•	 Apprenticeships are offered by two-fifths of
organisations overall, with a further 14%
planning to introduce them in the next 12
months. Twenty-eight per cent offer intern
schemes and 15% sponsor students through
university.
•	 Nearly half (46%) of organisations across all
sectors report that if their organisation offered
more apprenticeship programmes it would help
them get the skills they need.
Resourcing in turbulent times
•	 Half of the organisations surveyed report that
the economic climate has had a negative impact
on their organisation’s resourcing budgets for
2012–13. The public sector is most likely to
report reductions.
•	 Talent management budgets do not appear to
have been hit as much as resourcing budgets.
Just one in ten report that their overall talent
management spend has decreased in the last
12 months, while a quarter reported spend
had increased. Half of organisations report the
current economic situation has actually led to an
increased focus on talent management.
•	 Changes in resourcing and talent practices in
2012 compared with 2011 reflect a stronger
focus on costs and reductions in budgets. More
organisations anticipate they will be focusing on
developing talent in-house, retaining rather than
recruiting talent, redeploying people into new
roles and reducing their reliance on recruitment
agencies and external consultants for resourcing
and development.
•	 More than one-quarter report they will be
reducing the number of new recruits they hire
in 2012 and a fifth (19%) implementing a
recruitment freeze.
•	 At the same time, however, more organisations
report they will be recruiting for key talent/
niche areas in 2012 (60%) compared with 2011
(50%). The findings also suggest that more
time and effort will be invested in the quality of
candidates hired.
•	 Nearly three-quarters (71%) report that they
have noticed an increase in the number of
unsuitable applicants, while three-fifths report
that competition for talent is greater now.
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 8
The impact of the 2012 Olympic
Games
•	 Overall, more than one-quarter of organisations
reported that they would be allowing employees
time off to volunteer for the 2012 Olympic
Games.
•	 Half of organisations implemented particular
resource planning practices for the 2012
Olympics. Nearly one-third reported they would
be reminding employees of existing flexible
working opportunities and making TVs available
in the workplace, while more than one-quarter
reported they would try to accommodate
requests to work from home.
Diversity
•	 Overall, in little change from previous years,
just over half of organisations have a diversity
strategy, rising to 89% of public sector
organisations.
•	 This year we saw usage of diversity practices
return to 2010 levels. Last year we had noted a
reduction in the use of some methods, possibly
as a result of the pressures of the economic
downturn focusing attention elsewhere.
•	 There is a marked increase in the proportion who
report they are making attempts to employ the
long-term unemployed (52%, up from 19% in
2011) and those who are actively trying to attract
talent of all ages (59%, up from 45% last year).
•	 While the proportion of not-for-profit
organisations with a formal diversity policy
remains similar to last year, those with a formal
policy are now implementing a wider range of
practices in line with the public sector.
Labour turnover
•	 The median labour turnover rate (12.7) is similar
to last year (12.5) but less than previous years.
There are considerable differences within and
between sectors.
•	 More than one-third of organisations report that
their turnover had increased in 2011 compared
with 2010, while a quarter (26%) reported it
had decreased and two-fifths (38%) that it had
remained the same.
•	 There was considerable variation within
manufacturing and production and public
services, with more than two-fifths reporting
turnover had increased and more than a
third that it had decreased. Voluntary sector
organisations were least likely to report their
turnover had increased, while private services
were least likely to report turnover had
decreased.
Employee retention
•	 Only one-third of organisations experienced no
difficulties in retaining staff during the previous
year (2011 survey: 42%; 2010 survey: 45%;
2009 survey: 31%).
•	 Managers and professionals were most difficult
to retain, as in previous years.
•	 Most organisations have taken one or more steps
to address staff retention in 2011, although one
in five (19%) report that no specific retention
initiatives were undertaken. Our findings
suggest that more organisations were focused
on retention prior to the economic downturn,
although there is some indication that addressing
retention is increasingly returning to the agenda,
at least in the private sector.
•	 The most frequently cited actions taken by
employers to address retention were: improving
the people management skills of line managers
and increased learning and development
opportunities; these were also the methods most
commonly rated most effective.
For more information on the Annual Resourcing and
talent planning survey, visit
 www.cipd.co.uk/resourcingandtalentplanningsurvey
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 9
Reward strategy
•	 Higher levels of pay dispersion can be found
among the management/professional employee
group, where the ratio between the lowest paid
and the highest paid (medians) is 1:3.7 compared
with a ratio of 1:2.2 for other employees. The
public sector has the highest pay dispersion, with
a ratio of 1:5.7 between the lowest and highest
paid (medians) in the management/professional
group.
•	 Levels of pay transparency do not appear to
be high in our respondent organisations. Most
agreed that their organisations approach pay
as a private matter and will only provide pay
information when required to do so under
legislation. More respondents disagreed than
agreed that their organisations make pay policies
and practices public with the intention that pay
information is as transparent as possible.
Base pay
•	 Nearly half of all respondents said their
organisations use individual rates/ranges or spot
salaries to manage base pay; this is the most
common form of base pay management for all
types of employee. Broad-banding is the next
most popular for managers/professional staff,
while for other employees pay spines are also
common.
•	 To determine pay rates/salary levels and ranges,
most respondents said their organisations are
primarily guided by their ability to pay, closely
followed by the use of market rates (with a job
evaluation scheme). A quarter of organisations
use collective bargaining, particularly for
non-managerial/professional employees,
predominantly in the public sector.
•	 Individual performance is the most common
criteria for determining pay progression, with
•	 Over a quarter of respondents said their organisations operate a share scheme or other long-term incentive
(LTI) plan.
•	 Only a fifth of organisations have a defined benefit (DB) pension scheme (final salary or career average).
However, most DB schemes are now closed (either to new entrants or to new entrants and future accruals)
or are being wound up.
•	 Higher levels of pay dispersion can be found among the management/professional employee group, where
the ratio between the lowest paid and the highest paid (medians) is 1:3.7 compared with a ratio of 1:2.2
for other employees.
•	 Nine out of ten organisations contribute to a pension scheme.
•	 Four in ten organisations intended to make changes to their pension schemes in 2012. The most common
planned changes identified were to comply with auto-enrolment and to increase employees’ contributions
to a DB scheme.
(Respondents: reward managers in 455 organisations)
Reward management
in partnership with
Annual survey report 2012
in partnership with
REWARD
MANAGEMENT
2012
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 10
over three-quarters of all respondents saying
this is used in their organisations. Over half use
market rates as criteria for progression while the
least common criteria is length of service.
•	 Ability to pay, inflation and the movement in
market rates were the top three most important
factors in determining the size of pay reviews.
Performance-related reward,
incentive and recognition
•	 Two-thirds of organisations surveyed use some
form of performance-related reward, incentive or
recognition scheme.
•	 Individual bonuses are the most common form of
performance-related reward scheme, followed by
merit pay rises.
•	 Of respondents with performance pay schemes,
nearly half have goal-sharing (group bonuses
based on specific performance objectives)
operating in their organisations.
•	 Organisations tend to take one of two
approaches to coverage of employees in bonus
and incentive schemes: 91–100% employee
coverage is most common, closely followed by
0–10%.
•	 Just over a third of respondents operating
performance-related schemes provide individual
non-monetary recognition awards while one in
five use group-based non-monetary recognition
awards.
•	 Over a quarter of respondents said their
organisations operate a share scheme or other
long-term incentive (LTI) plan. Of those that
do, executive share options are most common,
followed by company share option plans.
Pensions and benefits
•	 Nine out of ten organisations in our survey
contribute to a pension scheme.
•	 Defined contribution (DC) schemes (such as
occupational DC, GPP and stakeholder) are the
most common.
•	 Only a fifth of organisations have a defined
benefit (DB) pension scheme (final salary or career
average). However, most DB schemes are now
closed (either to new entrants or to new entrants
and future accruals) or are being wound up.
•	 Four in ten organisations are intending to make
changes to their pension schemes this year. The
most common planned changes identified are
to comply with auto-enrolment and to increase
employees’ contributions to a DB scheme. Public
sector employers are most likely to ask employees
to pay more into a pension scheme.
•	 In preparing for pensions auto-enrolment, 69%
of our organisations are going to be seeking the
help of their pensions provider.
•	 Nearly one in four organisations in our survey
offer voluntary/affinity benefits; a similar number
also offer flexible benefit schemes but, after
pensions, the most common type of benefit
offered is flexible/homeworking.
•	 The most common benefits among organisations
in our survey include: annual leave in excess
of statutory, training and career development,
childcare vouchers, free tea, coffee and cold
drinks, a Christmas party or lunch, and on-site car
parking.
•	 Despite employee financial distress, nearly eight
out of ten employers offer no financial education
to their employees. Of those that do, group
seminars are the most common method of
delivery.
•	 Fewer than one in five of respondent
organisations provide total reward statements.
Paper statements are the most common method
of delivery, followed by online delivery.
•	 The majority predict that their benefit spend
(excluding pensions) will remain constant in the
year ahead. Just over a third see it increasing,
while one in ten predict benefit spend will
decrease.
•	 The top three reasons given for increases to
benefit spend are: increasing benefits costs,
because more staff will be employed, and to
increase or maintain the attractiveness of the
benefits package.
For more information on the Reward
management survey, visit
www.cipd.co.uk/rewardmanagementsurvey
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 11
Trends in learning and
development
•	 In-house development programmes and
coaching by line managers are still seen to be
the most effective practices. Nevertheless, more
organisations report on-the-job training among
their most effective methods, perhaps reflecting
an increased focus on lower-cost practices due to
economic pressures.
•	 The most common organisational change
expected to impact on learning and development
over the next two years is greater integration
between coaching, organisational development
and performance management to drive
organisational change, reported by nearly half of
organisations.
•	 A third of public sector organisations anticipate
greater use of e-learning across the organisation
over the next two years (compared with a fifth
of other organisations) and a quarter expect
less use of classroom and trainer-led instruction
(compared with less than one in seven of other
organisations).
Talent management
•	 Slightly fewer organisations report they
undertake talent management activities
compared with last year (2012: 54%; 2011:
61%). In two-fifths of organisations, talent
management activities cover all or most
employees, but most focus on high-potential
employees and senior managers. As in previous
years, developing high-potential employees and
growing future senior managers/leaders remain
the key objectives.
•	 Less than three-fifths of organisations with
talent management activities believe they are
effective, with nearly one in six (15%) reporting
they are ineffective. These figures show a
slight improvement on last year. As in previous
years, coaching is most commonly rated
among the most effective talent management
activities, followed by in-house development
programmes.
•	 The median annual training budget per employee was £276, less than last year (£350), with a
particularly dramatic reduction in the public sector. The median number of training hours employees
receive per year was 24, again a reduction on last year.
•	 Just one in ten organisations anticipated that the funding of learning and development would
increase in the next 12 months. Nearly two-fifths anticipated reductions.
•	 In-house development programmes and coaching by line managers are still seen to be the most
effective practices.
(Respondents: 766 learning and development managers)
Learning and talent
development
Annual survey report 2012
Issued:April2012Reference:5688©CharteredInstituteofPersonnelandDevelopment2012
LEARNING
AND TALENT
DEVELOPMENT
2012
in partnership with
in partnership with
Annual survey report 2012
LEARNING
AND TALENT
DEVELOPMENT
2012
in partnership with
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 12
Management and leadership skills
•	 Nearly three-quarters of organisations in England
report a deficit of management and leadership
skills. For two-thirds it is senior managers who lack
these skills, while the vast majority (85%) report
line managers and supervisors lack these skills.
•	 Organisations that place high importance
on management and leadership skills when
promoting individuals and those that provide
additional training are less likely to report they
have a management and skills deficit although,
even taking these measures, the proportion with
a deficit is still high. On average a quarter of the
workforces in the organisations surveyed have
line management responsibilities, so there is high
demand for these skills.
•	 One in seven organisations do not make any
attempt to evaluate individuals’ management
and leadership skills for promotions. Nearly half
evaluate management skills informally, while
two-fifths use 360-degree feedback and a
quarter use engagement surveys.
•	 Two-thirds of organisations provide new
managers with additional training. Reasons given
for not doing so are that managers do not need
any additional training (23%), budget issues
(28%) and lack of time (24%).
•	 Organisations are most likely to respond to
poor feedback for line managers and leaders by
giving appropriate feedback and a learning and
improvement plan. Far fewer organisations have
given informal warnings or penalised managers
through the performance review. The public
sector is least likely to take action in response to
poor feedback for line managers and leaders.
Leadership development
•	 As in previous years, the main leadership
skills that organisations lack are performance
management skills, leading and people
management skills, and skills to manage change.
•	 Most organisations (80%) report that they
intended to conduct leadership development
activities in 2012. The most common focus of
these activities, showing an increase compared
with previous years, was to improve the skills of
leaders to think in a more strategic and future-
focused way (54%). Other common objectives
include developing high-potential individuals
valued by the organisation, producing a common
standard of behaviour for those in leadership
roles and enabling the achievement of the
organisation’s strategic goals.
Development for managers with
international responsibilities
•	 Two-fifths of organisations that operate in more
than one country carry out specific learning and
talent development with managers who have
international responsibilities.
•	 The most common methods used to develop
the skills of managers with international
responsibilities are conference calls to facilitate
cross-border coaching and mentoring (53%),
and international conferences (52%).
•	 Larger organisations are more likely to use
programmes to nurture leadership talent
internationally. The most popular programmes
used were company-wide talent management
programmes for high-potentials and coaching
and mentoring to help international staff
move into key roles. The latter has increased in
popularity compared with previous years.
Individual and team learning
diagnostics
•	 Many organisations use one or more methods of
learning analysis/diagnostics in their learning and
development practice. Systematic approaches
(such as ‘Plan’ – ‘Do’ – ’Check’) were most
common, followed by Belbin team roles and
the Honey and Mumford Learning Styles
Questionnaire (LSQ).
•	 New insights on learning and development from
areas such as neuroscience, social psychology,
economics, computing and the natural sciences
are currently rarely incorporated into learning
and development practice in organisations. One
in six is incorporating the connection between
exercise and increased learning performance into
their practice.
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 13
Innovation and creativity
•	 Overall, two-fifths of organisations report that
innovation and creativity are critical to their
organisation and that everyone is involved. More
than twice as many private sector organisations
as public report that this is the case.
•	 The main focus of innovation strategies is to
ensure organisations can deliver faster and more
efficiently to customers (53%), although this is
less common in the public and non-profit sectors.
•	 Over half of manufacturing and production
organisations have specific project teams or
departments which focus on innovation and
creativity. The other sectors are less likely to
have specialist or project teams but rather tend
to encourage managers to innovate through
business as normal.
Economic situation and training
spend
•	 Organisations continue to face difficult economic
circumstances. Overall, half report that their
economic circumstances have declined in the
past 12 months, rising to three-quarters in the
public sector. This has had a corresponding
impact on the resources available for learning
and development, with a third reporting
resources have declined over the past year. The
public sector was particularly likely to report
that learning and development funding and
headcount has reduced.
•	 Over a third of L&TD departments reported
they had become more business-focused in
2012, continuing a trend observed in 2011.
Over a third of public sector organisations have
undergone a reduction in external suppliers
and moved to in-house provision, redundancies
of staff, rationalisation and ‘reduction’ of
departments including redeployment, while 22%
have closed or rationalised their training facilities.
•	 Most organisations have a training budget.
Training budgets usually cover external courses
and conferences (95%), hiring external
consultants and trainers (81%) and books,
training manuals, and so on (80%). They
cover training technology in more than half of
organisations (56%).
•	 The median annual training budget per
employee was £276, less than last year (£350),
with a particularly dramatic reduction in the
public sector. The median number of training
hours employees receive per year was 24, again
a reduction on last year. In very similar findings to
last year, just one in ten organisations anticipated
that the funding of learning and development
would increase in the next 12 months. Nearly
two-fifths anticipated reductions.
For more information on the Learning and talent
development survey, visit
 www.cipd.co.uk/learningandtalentdevelopmentsurvey
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 14
Absence levels
•	 The average level of employee absence has fallen
compared with last year from 7.7 days to 6.8
per employee per year. The private services and
public sector report the largest reductions.
•	 Public sector absence has fallen to the lowest
level recorded for this sector since we recorded
absence levels by sector in 2002, with a figure of
7.9 days per employee per year.
•	 Most organisations, particularly in the public
sector, record their annual employee absence rate.
•	 On average, public and non-profit employees have
approximately two days more absence per year
than their private sector counterparts. Manual
workers have one more day absence, on average,
than non-manual workers. Absence levels also
tend to increase with organisation size.
•	 Overall, more organisations report that their
absence levels have decreased (41%) compared
with the previous year than say it has increased
(27%). One-third report it has remained the
same.
•	 The majority of respondents, particularly in
organisations with high levels of absence, believe
it is possible to reduce absence.
Length of absence
•	 Two-thirds of working time lost to absence is
accounted for by short-term absences of up to
seven days. A fifth is attributed to long-term
absences (four weeks or more).
•	 Length of absence varies across sectors. A higher
proportion of absence in the public sector is due
to long-term absences of four weeks or longer.
•	 Smaller organisations are more likely to attribute
a higher proportion of their absence to short-
term leave compared with larger organisations.
Cost of absence
•	 Less than half of employers monitor the cost
of absence. The public sector and larger
organisations are most likely to do so.
•	 The average annual cost of employee absence
per employee varies considerably across
organisations, partly because they include
different costs in their calculations. On average,
the reported cost of absence per employee is less
than last year and back to levels reported in 2010
(2012 median: £600; 2011 median: £673; 2010
median: £600).
•	 The public and non-profit sectors report higher
costs of absence per employee than the private
•	 The average level of employee absence has fallen compared with last year from 7.7 days to 6.8
per employee per year. The private services and public sector report the largest reductions.
•	 Two-fifths of employers overall (52% in the public sector) reported that stress-related absence had
increased in the 12 months to June 2012. The most common cause of stress, as in previous years,
is workload. This year, however, it appears to be even more of an issue.
•	 Nearly a third of organisations report an increase in people coming to work ill in the previous 12
months and more than two-fifths had noted an increase in reported mental health problems.
•	 On average, the reported cost of absence per employee is £600.
(Respondents: 667 HR practitioners)
Absence management
in partnership with
Annual survey report 2012
2012ABSENCE
MANAGEMENT
in partnership with
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 15
sector. There is, however, a clear drop in the
median cost of absence per employee this year
in the public sector, which is not observed in the
other sectors.
Occupational sick pay
•	 Most employers surveyed (81%) provide
occupational sick pay to all employees. A further
10% provide it to some employees depending
on their level in the organisation or the nature of
their role.
•	 There is considerable variation in how long
organisations provide occupational sick pay to
an employee (with at least one year’s service)
who is on long-term sick leave. Public sector
employers provide full pay and then reduced pay
for significantly longer than employers from other
sectors.
•	 One in ten organisations have increased or
extended their occupational sick pay over the
past 12 months and a similar proportion have
decreased or restricted it.
Causes of absence
•	 Minor illnesses (such as colds, flu, stomach
upsets, headaches and migraines) are by far the
most common cause of short-term absence.
•	 Musculoskeletal injuries, back pain and stress
are the next most common causes of short-term
absence. Stress is more common for non-manual
workers, while musculoskeletal injuries and back
pain are more common for manual workers.
•	 Fewer employers rank absences not due to
genuine ill health among their top five most
common causes of short-term absence compared
with last year. Non-genuine absence is reportedly
most common in private services organisations.
•	 The most common causes of long-term absence
are stress, acute medical conditions (for example
stroke, heart attack and cancer), mental ill
health, musculoskeletal injuries and back pain.
Musculoskeletal injuries and back pain are
particularly common for manual workers while
stress is more common for non-manual workers.
•	 Stress is particularly common in the public
and non-profit sectors. The public sector is
also more likely to rank mental ill health and
musculoskeletal injuries among its top five causes
of long-term absence.
Work-related stress
•	 Two-fifths of employers overall (52% in the
public sector) report that stress-related absence
has increased over the past year. The most
common cause of stress, as in previous years, is
workload. This year, however, it appears to be
even more of an issue.
•	 Other top causes of stress at work include
management style, non-work factors such as
relationships and family, relationships at work and
considerable organisational change/restructuring.
•	 Considerable organisational change/restructuring
and job insecurity are more commonly ranked in
the top causes of stress in the public sector than
in the private.
•	 Three-fifths of organisations are taking steps
to identify and reduce stress in the workplace.
Nevertheless, more than a quarter (27%) of
organisations that report stress is one of the top
five causes of absence are not taking any steps to
address it.
•	 Just over a quarter of employers report they have
increased their focus on stress management
over the past 12 months. As in previous years,
public services employers are most likely to
be proactively managing stress; however, the
proportion doing so has fallen in comparison
with previous years.
•	 Popular methods to identify and reduce
workplace stress include staff surveys, training
for managers/staff and flexible working options/
improved work–life balance.
Managing absence
•	 Almost all organisations surveyed have a written
absence/attendance management policy.
•	 Half have introduced changes to some aspect of
their approach in the last year, with public sector
organisations most likely to have made changes.
•	 Overall, just under half of employers have a
target in place for reducing employee absence,
although this rises to 69% in the public sector.
•	 The most common methods used to manage
short-term absence are return-to-work interviews,
trigger mechanisms to review attendance, giving
sickness absence information to line managers
and disciplinary procedures for unacceptable
absence. These are also seen to be the most
effective methods.
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 16
•	 The most common methods used to manage
long-term absence – return-to-work interviews
and occupational health involvement – are also
reported to be the most effective, as was the
case last year.
•	 Line managers take primary responsibility
for managing short-term absence in 70% of
organisations overall, rising to 87% in the public
sector. They take responsibility for managing
long-term absence in 53% of organisations
overall (74% of the public sector). Not all
organisations, however, train managers in
absence-handling and fewer provide them with
tailored support.
•	 Private sector employers are much more likely to
restrict sick pay than the public sector. They are
also more likely to offer private medical insurance
and attendance bonuses or incentives.
•	 Public sector employers are more likely to use
a range of methods aimed at promoting good
health and flexibility. They are also more likely to
report that attendance is driven by the board,
although this is only the case for 28% of the
public sector (10% of the private).
The Statement of Fitness to Work
•	 The vast majority of organisations across all
sectors have used the ‘fit note’, but just one
in ten believe it has helped to reduce absence
levels, possibly because only one in ten think it is
being used effectively by GPs.
•	 Half of employers report that the fit note
prompts conversations about absence/health
between staff and line managers and just under
a third that it helps line managers to manage
absence.
Impact of the abolition of the
Default Retirement Age (DRA) on
absence
•	 Very few organisations report that the abolition
of the DRA has had an impact on absence
levels. A quarter of organisations have, however,
increased their use of flexible working practices
as a result of the abolition.
Employee well-being
•	 There has been a gradual increase over the past
few years in the proportion of organisations with
an employee well-being strategy. More than half
of organisations now have one in place.
•	 The most commonly provided well-being benefits
are access to counselling services and employee
assistance programmes, but the benefits
provided vary considerably across sectors.
•	 As in previous years, the public sector is most
likely to promote well-being through benefits to
facilitate healthy lifestyles. The private sector is
more likely to provide insurance for employees.
•	 Nearly half of organisations report their well-being
spend has not changed compared with the last
financial year. Just under a fifth of organisations
report their well-being spend has increased.
Similar changes are anticipated in 2013.
•	 In little change from last year, less than a quarter
of respondents report their organisations
evaluate the impact of their well-being spend.
Employee absence and the
recession
•	 Two-fifths of public sector organisations and at
least a fifth of organisations from other sectors
report they will be making redundancies over
the next six months. Overall, just a third of the
organisations surveyed report they won’t be
making any redundancies.
•	 Nearly a third of organisations report an increase
in people coming to work ill in the last 12 months
and more than two-fifths had noted an increase
in reported mental health problems. Both of these
issues have increased compared with previous years
and are more common in organisations that are
anticipating redundancies in the next six months.
•	 Nearly two-thirds of employers who have noticed
an increase in presenteeism in the last 12 months
are taking steps to discourage it.
•	 Less than a third of organisations (30%) report
they have increased their focus on employee
well-being and health promotion as a result of
the economic context.
 
For more information on the Absence management
survey, visit www.cipd.co.uk/absencemanagementsurvey
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 17
Job satisfaction and engagement
•	 The Engagement Index shows that the
proportion of employees engaged has remained
consistent throughout the year in ranging
between 38% and 39%.
•	 According to the autumn report, there is a strong
link between employees who are looking for
a new job and employee engagement. Of the
38% of employees who are engaged, just 7%
are looking for a new job, compared with a
survey average of 19%.
•	 Overall, job satisfaction remains high at +47
according to the autumn report. However, the
overall score is made up of several differences
across sectors. Currently, employees in the public
sector (+47) and private sector (+47) are equally
satisfied with their jobs.
Employee attitudes towards
managers
•	 Employees continue to be generally positive
in their attitudes towards their immediate line
managers. Overall, employees are most likely
to feel that their managers always/usually
treat them fairly (71%) and are committed to
their organisation (72%). On the other hand,
employees are least likely to say that their
manager always/usually coaches them on the job
(30%), discusses their training and development
needs (41%) or gives them feedback on how
they are performing (46%).
•	 Overall, respondents are less positive in their
attitudes towards their senior managers
compared with their immediate managers.
However, overall scores this quarter for
perceptions of leaders has improved during
the course of 2012 for treating employees
with respect (+16), having trust in leaders (+7),
confidence (+7) and clarity of vision (+26). There
has also been improvement around perceptions
of consultation on important decisions, but this is
still strongly a negative net perception (–20).
Employee outlook
•	 The Engagement Index shows that the proportion of engaged employees has remained consistent throughout
the year in ranging between 38% and 39%.
•	 The proportion of staff saying they are under excessive pressure either every day or once or twice a week has
increased gradually in 2012. More than two-fifths of employees now report being under such pressure once
or twice a week. Public sector employees are most likely to report they are under excessive pressure.
•	 The proportion of employees saying it is likely or very likely they could lose their job as a result of the
economic downturn has shown little movement in 2012. According to the most recent autumn report, a fifth
of employees report this. In all, 12% of employees think it would be easy or very easy to find a new job if they
lost their current position, unchanged compared with the previous quarter.
(Employee Outlook 2012 (Respondents: 2,000 employees)
Winter 2012
Employee Outlook
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 18
Communication and advocacy
•	 Over half of respondents (55%) feel fully or fairly
well informed about what is happening within
their organisations; this has stayed fairly constant
in 2012.
•	 More than half of the sample (52%) would
be very likely or likely to recommend their
organisation as an employer to others.
Views on values
•	 Just over a quarter of employees (28%) say they
are aware of the values of the organisation they
work for to a great extent, while 47% say they
are aware to some extent. A total of 15% of
respondents report they are not at all aware of
their organisation’s values. Just 5% of employees
say their organisation does not have any values.
•	 Almost three-quarters (72%) of employees
believe it is important or very important for
organisations to have defined values which
govern employees’ behaviour.
•	 Almost six in ten employees agree (43%) or
strongly agree (15%) their personal values match
those of their organisation. Nearly a third (29%)
neither agree nor disagree, while 11% either
disagree (9%) or strongly disagree (2%).
•	 Just over half of respondents agree that their
organisation’s values positively influence people’s
behaviour at work. A third neither agree nor
disagree, with 13% disagreeing (10%) or
strongly disagreeing (3%).
•	 Board-level directors and other senior managers
are most likely to agree that their organisation’s
values positively influence people’s behaviour at
work. Line managers and middle managers are
least likely to agree that this is the case.
•	 Almost three-quarters of engaged employees
agree or strongly agree that their organisation’s
values positively influence people’s behaviour,
compared with just 32% of staff with neutral
levels of engagement and just 18% of
disengaged employees.
Pressure at work
•	 The proportion of staff saying they are under
excessive pressure either every day or once or
twice a week has increased to 41%, during the
course of 2012.
•	 Public sector employees are significantly more
likely to report they are under excessive pressure
than employees in the other two main sectors,
with 50% saying they are under excessive
pressure either every day (21%) or once or twice
a week (29%).
Work–life balance
•	 The proportion of employees agreeing or strongly
agreeing they achieve the right work–life balance
has increased to 61%.
Employee attitudes and the
economic downturn
•	 The proportion of employees saying it is likely or
very likely they could lose their job as a result of
the economic downturn is 20%.
•	 In all, 12% of employees think it would be easy
or very easy to find a new job if they lost their
current position.
•	 Just over a third of employees (36%) report their
organisation has made redundancies as a result
of the economic downturn. The proportion of
public sector staff saying their organisation has
made redundancies has remained fairly static at
57% (56% last quarter). In all, 29% of private
sector employees report their organisation has
made redundancies.
•	 The proportion of workers saying their
organisation is planning to make redundancies is
currently 13%.
Job-seeking
•	 Just under a fifth (19%) of respondents are
currently looking for a new job with a different
employer (summer: 20%). Respondents from the
voluntary sector are most likely to be seeking out
new opportunities (26%), with those from the
private sector least likely to be (19%).
•	 Senior managers or directors below board level
(28%) are most likely to be looking for a new
job. With regard to length of service, those
employees who have been with their employer
for one to two years are most likely to be actively
seeking a new job (32%).
For more information on the Employee outlook
survey, visit www.cipd.co.uk/employeeoutlook
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 19
Key findings
•	 The net employment balance – which measures
the difference between the proportion of
employers who expect to increase staff levels
over those who expect to decrease staff levels –
increased to +7 from +5 in the final quarter of
2012. The private sector employment balance
has fallen to +18 from +28 compared with three
months ago, whereas the public sector balance
has improved from –36 to –17 during the same
period.
•	 Almost a fifth (17%) of employers say they
have increased their use of casual workers or
employees on zero-hour contracts during the
past year. Public sector employers are more
likely to report that they have increased their
use of hiring temporary and casual workers or
employees on zero-hour contracts in 2012.
•	 Around a fifth say that they plan to employ
fewer agency workers in the 12 months to
September 2013. These developments may
also reflect, in part, employer concerns about
the costs associated with the Agency Workers
Directive.
•	 More than three in five private sector companies
(61%) say they are either confident or fairly
confident about the growth prospects of their
organisation in 2013. On the downside, around
a quarter of private sector firms report that they
are not confident about the growth prospects of
their firm at all in the next year.
•	 Basic pay award expectations for the next 12
months have edged up to 1.7% according to
the most recent autumn report. Average basic
pay award expectations in the public sector
have risen to 0.6% from 0.2%. Meanwhile,
pay expectations in the private sector have also
increased to 2.6% from 2.5%.
 
•	 The proportion of employers that expected staff levels to increase against those that expected
them to decrease increased to +7 in the three months to December 2012 from +5 in the three
months to September 2012. Reflecting the official labour market statistics, which have shown
strong employment growth in 2012, the report’s projections have been positive in each quarter
of 2012.
•	 Average pay expectations have ranged between 1.5% and 1.7% during the course of 2012.
(Respondents: HR practitioners in 1,000+ UK organisations)
Labour market outlook
in partnership with
Labour Market Outlook
Autumn 2012
Labour Market Outlook
Autumn2012
in partnership with
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 20
Mark Beatson, CIPD Chief
Economist
One year ago, pessimism and uncertainty were
present in just about every assessment of economic
prospects for 2012. Most forecasters expected
modest growth, as in 2011. But even this prognosis
was too optimistic. The UK economy entered
recession again in the first half of 2012 and, despite
a recent recovery, it is now expected to have
contracted marginally over the year as a whole.
Against this background, the UK labour market has
defied all expectations. Employment has increased
by about half a million and unemployment has
fallen. Looking ahead, 2013 is expected to be a year
when growth begins to pick up but the situation
in Europe, in particular, still presents formidable
risks for the UK. The question is whether the UK
can continue to sustain jobs growth against this
economic background.
Review of economic and labour
market developments in 2012
The economic forecast published by the independent
Office for Budget Responsibility (OBR) alongside the
Autumn Statement in November 2011 acknowledged
that the economy was entering a difficult period. The
headline measure of gross domestic product (GDP)
was expected to be flat in the first half of 2012 before
recovering in the second half of the year, with overall
growth in 2012 of 0.7%. This compares with an
estimated out-turn for 2011 of 0.9%.
Even these modest expectations turned out to be
too optimistic. Output fell in the first two quarters
of 2012 as the UK entered a ‘double dip’ recession,
although the latest figures, for the third quarter
of 2012, show a recovery in output. Nevertheless,
the latest OBR forecast, published alongside the
December 2012 Autumn Statement, expects output
for 2012 as a whole to have fallen by 0.1%.
One factor explaining the UK’s poor growth
performance has been very difficult international
conditions, especially the prolonged crisis (or
series of crises) in the eurozone. The Organization
for Economic Co-operation and Development
(OECD) expects output across the Eurozone to fall
by 0.4% in 2012 (see Figure 1). Even Germany,
previously the motor of the Eurozone, is only
forecast to grow by 0.9%. Italy, Spain, Portugal
and Greece are all expected to see output fall
as they attempt to bring their public finances
under control through cuts in public expenditure
and increases in taxation. Low growth in Europe,
together with some weakening of the euro
relative to the pound, has meant that UK exports
to these markets did not make the expected
contribution to growth in 2012.
The process of fiscal consolidation taking place in
the UK meant, as expected, that the UK government
sector could not take up the slack through increased
public expenditure or reduced taxation. In addition,
higher than expected inflation meant that household
incomes were squeezed by more than expected, and
this had a knock-on effect on consumption.
Against this background, 2012 should have
been a very difficult year for the labour market.
In November 2011, the OBR forecast was that
total employment would remain flat throughout
2012 at 29.1 million, while the number of people
unemployed on the headline (ILO) measure would
increase from 2.5 million to 2.8 million.
Recall that these forecasts were based on
output increasing by 0.7%, when it is likely that
output will turn out to be flat or have fallen. The
implication is that the OBR, if it had predicted
growth correctly, would have expected employment
to fall in 2012 and unemployment to rise further.
Yet this did not happen. Employment increased
by 500,000 between the third quarter of 2011
and the third quarter of 2012. Unemployment
fell by 100,000 over the same period. This defied
forecasters’ expectations as well as seeming to defy
conventional economic wisdom.
The economy and labour market in 2013
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 21
The puzzle of employment
growth in 2012
During the first two quarters of 2012, total
employment is estimated to have increased from
29.1 million to 29.5 million, despite these being
quarters when output fell. In the third quarter of
2012, output is estimated to have increased by 1%,
with employment increasing by a further 100,000.
All of this jobs growth was in the private sector.
Excluding changes in classification, public sector
employment fell by 114,000 between the third
quarter of 2011 and the third quarter of 2012.
There are a number of potential explanations why
the current recession has been relatively ‘jobs rich’
compared with the recessions of the early 1980s
and early 1990s – when smaller falls in output
produced higher levels of unemployment. These
may shed some light on why employment continued
unexpectedly to grow in 2012.
One potential explanation is growth in part-time
work – effectively sharing the available paid
employment among more people. In the year to
August–October 2012 (the latest figures at the time
of writing), the number of people working part-time
increased by 288,000 whereas the number working
full-time increased by 210,000. In addition, the
number of part-time workers who said they were
doing so because they could not find a full-time job
increased by 125,000, an increase from 16.7% of
part-time workers to 17.7%.
Involuntary part-time work can be seen as one form
of ‘underemployment’ – defined by the ONS as
people in employment who want to work longer
hours (either in their current job or in another job)
and are available to work longer hours. According
to the ONS, in 2012 just over 3 million people
were underemployed on this definition. However,
growth in part-time work and underemployment
does not appear to be a prime cause of the increase
in employment during 2012. The total number of
hours worked has increased by 2.6% in the past
year. Average weekly hours worked have increased
in the past year for both full-time and part-time
workers. There may be a significant number of
people wanting to work more hours, but this has
not increased rapidly in the past year and hence is
not sufficient on its own to explain recent labour
market developments.
Another potential explanation is what has been
termed ‘labour hoarding’. Faced with a downturn
in demand, rather than resorting immediately to
Figure 1: OECD growth forecasts for 2012
2
G
erm
any
Ireland
GDPgrowth(%pa)
France
UK
Eurozone
Spain
Italy
Portugal
G
reece
1
0
–1
–2
–3
–4
–5
–6
–7
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 22
redundancies, organisations have been finding ways
to preserve employment levels. The rationale for
this is that firing in a downturn and recruiting again
in an upturn both involve significant financial and
productivity costs. Organisations in good financial
shape have been seeking to avoid these costs by
maintaining employment, possibly accompanied by
cost reduction measures such as wage freezes and
reductions in working hours.
Evidence from the CIPD’s Labour Market Outlook
surveys suggests that some employers have adopted
this strategy. The summer 2012 survey found that
31% of private sector employers had maintained
staffing levels higher than required to meet current
output and service delivery requirements. The main
reason given for doing this (reported by 62% of
employers) was to maintain the skills base within the
organisation. The same survey found that 32% of
employers had reduced working hours for some staff
in the five years preceding the survey and only one
in five (18%) had restored working hours to pre-
recession levels for all staff affected.
There is also some support from the economic
statistics. While total hours worked have now
surpassed their pre-recession 2008 peak, output is
still lower, meaning that average labour productivity
has fallen. Although there are other explanations
for a fall in labour productivity, it is consistent with a
degree of labour hoarding.
Organisations looking to maintain employment
levels or take on extra workers have been helped
by continued moderation of labour costs. Year-on-
year growth in average weekly earnings in the three
months to October 2012 was 1.8%. It is now over
three years since earnings growth last exceeded
price inflation. The implied reduction in household
purchasing power helps to explain why domestic
demand has failed to stimulate economic growth.
But falling real earnings also make it easier for
employers to create new jobs and avoid job losses.
Another potential explanation is through expansions
in labour supply and job search activity. More
people looking for work – or looking for work more
effectively – should, other things being equal, lead
to greater numbers in employment, although this
may have the effect of restraining growth in earnings
among those in work.
One potential source of additional labour supply
might have been lone parents with older children
and other people claiming out-of-work benefits.
Changes to the rules governing eligibility for benefits
appear to have led to a noticeable increase, of about
30,000, in the number of lone parents claiming Job
Seekers Allowance during 2012. These lone parents
will be subject to the job search requirements of
JSA and in some cases this might have led to them
finding work.
The last year has also seen increases in employment
among older age groups. At August–October 2012,
the number of people over 50 in employment had
increased over the previous year by 238,000. This
change is not purely due to increased numbers
of people in these age groups: employment rates
increased for both 50–64-year-olds and those aged
65 and over. Financial pressures, such as much lower
annuity rates for occupational pensions, may in some
cases have been a factor encouraging older people
to stay in employment or work for themselves.
None of these potential explanations independently
provides a complete explanation for the growth in
employment in 2012. However, in combination,
they provide at least a partial account. Falling real
earnings has enabled organisations to preserve
employment and create new jobs, even if some of
these are on a part-time or temporary basis.
A barometer of HR trends and prospects 2013 Overview of CIPD surveys 23
Prospects for 2013
The latest OBR forecast released with the 2012
Autumn Statement foresees another year of
weak economic growth in the UK, set against a
backdrop of continued international turbulence.
In particular, both the OBR and the OECD now
expect output in the eurozone to fall again
in 2013 (see Figure 2). It is difficult to see a
speedy resolution of the eurozone’s problems,
given German elections in the autumn of 2013.
Anticipated fiscal tightening in the USA will
have an impact on demand there and there are
some signs of growth slowing down in emerging
markets.
Weakness in the eurozone is again expected to have
an adverse effect on the UK’s trade performance.
However, the OBR does expect growth to pick up
during 2013, with output growth of 1.2%.
There are clearly risks to even this modest growth
forecast. A renewed crisis in one of the weaker
eurozone economies, for example, or a more drastic
fiscal tightening in the USA than assumed by the
OBR, would make even 1.2% growth a struggle.
In terms of the labour market, the OBR forecast total
employment remaining flat at 29.6 million between
the third quarter of 2012 (the latest actual data)
and the fourth quarter of 2013. As a result, the OBR
forecast an increase in unemployment by 100,000,
with the unemployment rate peaking at 8.3%
towards the end of 2013.
It is important to note that this employment forecast
– several quarters of flat employment – is very
similar to that produced by the OBR a year ago. That
forecasts failed to anticipate employment growth
of 500,000. Is it possible that employment in 2013
could again defy expectations and continue to
increase?
Some of the factors that might have contributed
to jobs growth in 2012 are likely to remain in play
in 2013. We can expect continued efforts on the
Figure 2: OECD growth forecasts for 2013
9
GDPgrowth(%pa)
8
7
6
5
4
3
2
1
0
–1
China UKIndia JapanUS Eurozone
A barometer of HR trends and prospects 2013
www.cipd.co.uk/labourmarketoutlook
Overview of CIPD surveys 24
part of Jobcentre Plus to strengthen labour market
attachment among those currently claiming out-
of-work benefits. Average earnings are forecast to
increase by 2.2%, less than the forecast increase
in price inflation (2.8%), making 2013 the fourth
calendar year in a row when average earnings will
have fallen in real terms. So employers are unlikely to
face significant labour cost pressures.
On the other hand, if confidence about future
growth does not improve, employers that have tried
to maintain employment levels and their skills base
may reach a point where they feel reductions in the
workforce can no longer be avoided. The summer
2012 Labour Market Outlook found that, of the
31% of private sector employers who said they had
staffing levels higher than required to meet current
requirements, 64% said they were likely or very likely to
cut back on excess labour if demand did not recover.
This makes it difficult to predict whether the jobs
growth of 2012 is permanent or whether it will
unwind. Much will depend on business confidence.
Forward-looking indicators of hiring indications, such
as recruitment agency surveys, in most cases remain
positive. So 2013 could see continued recruitment
leading to some further increase in employment –
and hence an increase in employment above OBR
forecasts – even if some private sector organisations
are adjusting their staffing levels downwards. But
this could be accompanied by a continued squeeze
on real wages.
Alongside the overall numbers, however, a factor
that might characterise the labour market in 2013
is a sense of caution and nervousness on the part of
both employers and workers.
Many employers are likely to be cautious about
expanding their workforce until they are convinced
that the economy is on a path to sustained growth.
Until then, a focus on keeping labour costs under
control and retaining flexibility through the use of
temporary workers and/or variable hours might be a
common strategy.
Those in work might be relieved to have a job but an
increasing proportion of them might prefer another
job that offered longer hours or greater security. Pay
on average will not be keeping pace with inflation.
However, even those dissatisfied with their current
situation might still prefer to ‘sit tight’ in their current
employment until the jobs market shows clear signs
of improvement.
Beyond 2013
Forecasts become more uncertain the further they
go into the future. The OBR’s view, shared by other
forecasts, is that growth in the UK will pick up in
2013 and then accelerate over the following two
years towards the UK’s trend growth rate. Hence
the OBR forecasts 2% growth in 2014 and 2.3% in
2015, picking up towards 2.7% in 2016.
These longer-term forecasts are slightly lower
than in previous OBR forecasts. This reflects two
factors. First, fiscal consolidation and reductions in
public expenditure are now expected to continue
through until at least fiscal year 2017–18. Second,
the OBR now believes that the financial crisis and
its aftermath will have a long-lasting, possibly
permanent, effect on UK growth potential because
businesses will find it more expensive to finance
investment in a post-crisis world.
For more information on the Labour market outlook
survey, visit
Issued: December 2012 Reference: 6086 © Chartered Institute of Personnel and Development 2012
Chartered Institute of Personnel and Development
151 The Broadway London SW19 1JQ UK
Tel: +44 (0)20 8612 6200  Fax: +44 (0)20 8612 6201
Email: cipd@cipd.co.uk Website: cipd.co.uk
Incorporated by Royal Charter  Registered charity no.1079797

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A Barometer of HR Trends and Prospects 2013 by CIPD

  • 1. Overview of CIPD surveys A barometer of HR trends and prospects 2013
  • 2. Chartered Institute of Personnel and Development The CIPD is the world’s largest Chartered HR and development professional body, with 135,000 members – including over 84,000 professional members. Our members include the next generation of HR professionals and many of the world’s most influential senior HR leaders from world-class organisations. For the last 100 years we’ve been supporting HR to drive business performance. We set the standards for best practice in HR and its specialisms. It’s our aim to support and develop professional capability by shaping thinking, leading best practice and building HR’s profile in business today, and for the next 100 years. cipd.co.uk
  • 3. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 3 Contents A barometer of HR trends and prospects 2013 Findings from the 2012 surveys – a human capital checklist for UK plc 4 Introduction 5 Resourcing and talent planning 6 Reward management 9 Learning and talent development 11 Absence management 14 Employee outlook 17 Labour market outlook 19 The economy and labour market in 2013 20
  • 4. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 4 Labour turnover 13% Organisations experiencing recruitment difficulties 82% Organisations experiencing retention problems 34% The percentage of organisations that have a defined benefit (DB) pension scheme (final salary or career average) 20% The percentage of employees that report being under pressure once or twice a week 41% The percentage of employees that think it would be easy or very easy to find a new job if they lost their current position 12% Training hours received per employee 24% Median annual training budget per employee £276 Organisations that anticipated the funding of learning and development would increase in 2012 10% Organisations that anticipated reductions in the funding of learning and development in 2012 39% Absence 7 working days per employee Cost of absence £600 per employee per year Findings from the 2012 surveys – a human capital checklist for UK plc
  • 5. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 5 Throughout 2012 the Chartered Institute of Personnel and Development (CIPD) surveyed every changing aspect of the world of work. This eleventh annual people management and development barometer report is a compendium of individual surveys drawing out common themes and highlighting emerging trends. Alongside the existing battery of annual CIPD surveys, the CIPD produces a quarterly Outlook series that comprises the CIPD Labour Market Outlook, a survey of recruitment, redundancy and pay intentions among HR professionals; and the CIPD Employee Outlook, a snapshot of a random sample of employee attitudes. The barometer report also looks ahead to the next 12 months with our annual employment forecast. The CIPD forecasts that the UK labour market faces two scenarios in the coming year. In the first scenario, the labour market will continue on its current upward trajectory, with employment levels continuing to rise. In the second scenario, which is consistent with the recent Office for Budget Responsibility forecast, unemployment will rise by 100,000. As the CIPD warned in summer 2012, some employers may be forced to make redundancies in 2013 if the growth prospects do not improve. Common to both scenarios, employers will continue to focus on labour costs, which will mean that salaries will fail to keep pace with inflation for the fourth year in a row. The report also reviews the suite of backward- looking annual and quarterly surveys produced by the CIPD. Some of the information in these surveys thus relates to 2011 as well as 2012. The summary of main findings can be read as a baseline human capital report for UK plc. Individual surveys looked at all the key issues facing HR practitioners: • resourcing and talent planning • reward management • learning and development • absence management • employee attitudes Our surveys are drawn from relatively large sample sizes and provide comprehensive coverage across all sectors and sizes of organisation. Each survey report is an invaluable source of benchmarking information for practitioners and policy-makers. This ‘all in one place’ compendium presents the main findings from each of our 2012 surveys and outlines the challenges facing HR practitioners in 2013. Copies of the CIPD’s survey reports can be obtained free from our website at: cipd.co.uk/surveys   Introduction
  • 6. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 6 The number and nature of vacancies • On average the number of permanent vacancies organisations attempted to fill in 2011 was much lower than before the 2008 financial crisis. • The number of vacancies in very large private sector organisations fell during the same period compared with the previous 12 months, but increased slightly in small to medium organisations. In contrast, large public sector organisations report more vacancies, although considerably fewer than in 2008. • A fifth of organisations believe that the abolition of the Default Retirement Age (DRA) will mean they recruit fewer people. • One in four organisations report that they have reduced their use of agency workers since October 2011 when the Agency Workers’ Regulations came into force. Attracting and selecting candidates • While the effectiveness of methods to attract applicants varies according to organisation sector and size, the most effective methods overall were reported to be through organisations’ own corporate websites and recruitment agencies, as was the case last year. However, the number of employers using recruitment agencies has fallen year-on-year for the past three years. • The private sector, particularly manufacturing and production organisations, were three times more likely than public sector organisations to include recruitment agencies among their most effective methods for attracting candidates. • Local and national newspapers were less frequently ranked among organisations’ most effective methods of attracting candidates compared with previous years, while more consider apprenticeships among their most effective methods. • Labour turnover for all UK employees is 13%. • Eighty-two per cent of organisations reported difficulty in filling vacancies, up from 75% in the 2011 survey. • The median recruitment cost of filling a vacancy was £8,000 for senior managers/directors and £3,000 for other employees, showing a modest increase compared with last year. • The most frequently cited cause of recruitment difficulties was lack of specialist or technical skills (59%). • Around one-third (34%) of organisations report having no retention difficulties, down from 42% in 2011. • One in four organisations report that they have reduced their use of agency workers since October 2011 when the Agency Workers’ Regulations came into force. (Respondents: 522 HR practitioners in UK organisations) RESOURCING AND TALENT PLANNING 2012 Annual survey report 2012 Executive summary in partnership with Resourcing and talent planning in partnership with
  • 7. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 7 • Overall, one-third of organisations report that they have reduced their use of recruitment partners, although only a minority have stopped using them and one in five have formed a closer business partnership with them over the past year. • The median recruitment cost of filling a vacancy was £8,000 for senior managers/directors and £3,000 for other employees (adjusting for accuracy). Recruitment difficulties • One in three organisations report that the length of their recruitment process has led to the loss of potential recruits. • Eighty-two per cent of organisations reported difficulties in filling at least some vacancies over the past few months, with all sectors (but particularly the public sector) reporting more difficulties compared with last year. • There has been a step-increase (particularly in the public sector) in the proportion reporting difficulties in filling vacancies for senior managers/directors. • Managers and professionals and technical positions were the most difficult vacancies to fill. • As in previous years, the main reason for recruitment difficulties was a lack of necessary specialist or technical skills. Employing younger workers • A quarter of organisations report they are employing more 16–24-year-olds compared with one year ago. • Nearly one-third of organisations operate a structured graduate recruitment programme. Their use has increased in larger organisations compared with previous years as well as in the manufacturing and production sector generally. • Two-fifths of organisations are concerned that the increase in university tuition fees will make it harder to get the skills they need (rising to half of those with graduate recruitment schemes). • Apprenticeships are offered by two-fifths of organisations overall, with a further 14% planning to introduce them in the next 12 months. Twenty-eight per cent offer intern schemes and 15% sponsor students through university. • Nearly half (46%) of organisations across all sectors report that if their organisation offered more apprenticeship programmes it would help them get the skills they need. Resourcing in turbulent times • Half of the organisations surveyed report that the economic climate has had a negative impact on their organisation’s resourcing budgets for 2012–13. The public sector is most likely to report reductions. • Talent management budgets do not appear to have been hit as much as resourcing budgets. Just one in ten report that their overall talent management spend has decreased in the last 12 months, while a quarter reported spend had increased. Half of organisations report the current economic situation has actually led to an increased focus on talent management. • Changes in resourcing and talent practices in 2012 compared with 2011 reflect a stronger focus on costs and reductions in budgets. More organisations anticipate they will be focusing on developing talent in-house, retaining rather than recruiting talent, redeploying people into new roles and reducing their reliance on recruitment agencies and external consultants for resourcing and development. • More than one-quarter report they will be reducing the number of new recruits they hire in 2012 and a fifth (19%) implementing a recruitment freeze. • At the same time, however, more organisations report they will be recruiting for key talent/ niche areas in 2012 (60%) compared with 2011 (50%). The findings also suggest that more time and effort will be invested in the quality of candidates hired. • Nearly three-quarters (71%) report that they have noticed an increase in the number of unsuitable applicants, while three-fifths report that competition for talent is greater now.
  • 8. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 8 The impact of the 2012 Olympic Games • Overall, more than one-quarter of organisations reported that they would be allowing employees time off to volunteer for the 2012 Olympic Games. • Half of organisations implemented particular resource planning practices for the 2012 Olympics. Nearly one-third reported they would be reminding employees of existing flexible working opportunities and making TVs available in the workplace, while more than one-quarter reported they would try to accommodate requests to work from home. Diversity • Overall, in little change from previous years, just over half of organisations have a diversity strategy, rising to 89% of public sector organisations. • This year we saw usage of diversity practices return to 2010 levels. Last year we had noted a reduction in the use of some methods, possibly as a result of the pressures of the economic downturn focusing attention elsewhere. • There is a marked increase in the proportion who report they are making attempts to employ the long-term unemployed (52%, up from 19% in 2011) and those who are actively trying to attract talent of all ages (59%, up from 45% last year). • While the proportion of not-for-profit organisations with a formal diversity policy remains similar to last year, those with a formal policy are now implementing a wider range of practices in line with the public sector. Labour turnover • The median labour turnover rate (12.7) is similar to last year (12.5) but less than previous years. There are considerable differences within and between sectors. • More than one-third of organisations report that their turnover had increased in 2011 compared with 2010, while a quarter (26%) reported it had decreased and two-fifths (38%) that it had remained the same. • There was considerable variation within manufacturing and production and public services, with more than two-fifths reporting turnover had increased and more than a third that it had decreased. Voluntary sector organisations were least likely to report their turnover had increased, while private services were least likely to report turnover had decreased. Employee retention • Only one-third of organisations experienced no difficulties in retaining staff during the previous year (2011 survey: 42%; 2010 survey: 45%; 2009 survey: 31%). • Managers and professionals were most difficult to retain, as in previous years. • Most organisations have taken one or more steps to address staff retention in 2011, although one in five (19%) report that no specific retention initiatives were undertaken. Our findings suggest that more organisations were focused on retention prior to the economic downturn, although there is some indication that addressing retention is increasingly returning to the agenda, at least in the private sector. • The most frequently cited actions taken by employers to address retention were: improving the people management skills of line managers and increased learning and development opportunities; these were also the methods most commonly rated most effective. For more information on the Annual Resourcing and talent planning survey, visit  www.cipd.co.uk/resourcingandtalentplanningsurvey
  • 9. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 9 Reward strategy • Higher levels of pay dispersion can be found among the management/professional employee group, where the ratio between the lowest paid and the highest paid (medians) is 1:3.7 compared with a ratio of 1:2.2 for other employees. The public sector has the highest pay dispersion, with a ratio of 1:5.7 between the lowest and highest paid (medians) in the management/professional group. • Levels of pay transparency do not appear to be high in our respondent organisations. Most agreed that their organisations approach pay as a private matter and will only provide pay information when required to do so under legislation. More respondents disagreed than agreed that their organisations make pay policies and practices public with the intention that pay information is as transparent as possible. Base pay • Nearly half of all respondents said their organisations use individual rates/ranges or spot salaries to manage base pay; this is the most common form of base pay management for all types of employee. Broad-banding is the next most popular for managers/professional staff, while for other employees pay spines are also common. • To determine pay rates/salary levels and ranges, most respondents said their organisations are primarily guided by their ability to pay, closely followed by the use of market rates (with a job evaluation scheme). A quarter of organisations use collective bargaining, particularly for non-managerial/professional employees, predominantly in the public sector. • Individual performance is the most common criteria for determining pay progression, with • Over a quarter of respondents said their organisations operate a share scheme or other long-term incentive (LTI) plan. • Only a fifth of organisations have a defined benefit (DB) pension scheme (final salary or career average). However, most DB schemes are now closed (either to new entrants or to new entrants and future accruals) or are being wound up. • Higher levels of pay dispersion can be found among the management/professional employee group, where the ratio between the lowest paid and the highest paid (medians) is 1:3.7 compared with a ratio of 1:2.2 for other employees. • Nine out of ten organisations contribute to a pension scheme. • Four in ten organisations intended to make changes to their pension schemes in 2012. The most common planned changes identified were to comply with auto-enrolment and to increase employees’ contributions to a DB scheme. (Respondents: reward managers in 455 organisations) Reward management in partnership with Annual survey report 2012 in partnership with REWARD MANAGEMENT 2012
  • 10. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 10 over three-quarters of all respondents saying this is used in their organisations. Over half use market rates as criteria for progression while the least common criteria is length of service. • Ability to pay, inflation and the movement in market rates were the top three most important factors in determining the size of pay reviews. Performance-related reward, incentive and recognition • Two-thirds of organisations surveyed use some form of performance-related reward, incentive or recognition scheme. • Individual bonuses are the most common form of performance-related reward scheme, followed by merit pay rises. • Of respondents with performance pay schemes, nearly half have goal-sharing (group bonuses based on specific performance objectives) operating in their organisations. • Organisations tend to take one of two approaches to coverage of employees in bonus and incentive schemes: 91–100% employee coverage is most common, closely followed by 0–10%. • Just over a third of respondents operating performance-related schemes provide individual non-monetary recognition awards while one in five use group-based non-monetary recognition awards. • Over a quarter of respondents said their organisations operate a share scheme or other long-term incentive (LTI) plan. Of those that do, executive share options are most common, followed by company share option plans. Pensions and benefits • Nine out of ten organisations in our survey contribute to a pension scheme. • Defined contribution (DC) schemes (such as occupational DC, GPP and stakeholder) are the most common. • Only a fifth of organisations have a defined benefit (DB) pension scheme (final salary or career average). However, most DB schemes are now closed (either to new entrants or to new entrants and future accruals) or are being wound up. • Four in ten organisations are intending to make changes to their pension schemes this year. The most common planned changes identified are to comply with auto-enrolment and to increase employees’ contributions to a DB scheme. Public sector employers are most likely to ask employees to pay more into a pension scheme. • In preparing for pensions auto-enrolment, 69% of our organisations are going to be seeking the help of their pensions provider. • Nearly one in four organisations in our survey offer voluntary/affinity benefits; a similar number also offer flexible benefit schemes but, after pensions, the most common type of benefit offered is flexible/homeworking. • The most common benefits among organisations in our survey include: annual leave in excess of statutory, training and career development, childcare vouchers, free tea, coffee and cold drinks, a Christmas party or lunch, and on-site car parking. • Despite employee financial distress, nearly eight out of ten employers offer no financial education to their employees. Of those that do, group seminars are the most common method of delivery. • Fewer than one in five of respondent organisations provide total reward statements. Paper statements are the most common method of delivery, followed by online delivery. • The majority predict that their benefit spend (excluding pensions) will remain constant in the year ahead. Just over a third see it increasing, while one in ten predict benefit spend will decrease. • The top three reasons given for increases to benefit spend are: increasing benefits costs, because more staff will be employed, and to increase or maintain the attractiveness of the benefits package. For more information on the Reward management survey, visit www.cipd.co.uk/rewardmanagementsurvey
  • 11. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 11 Trends in learning and development • In-house development programmes and coaching by line managers are still seen to be the most effective practices. Nevertheless, more organisations report on-the-job training among their most effective methods, perhaps reflecting an increased focus on lower-cost practices due to economic pressures. • The most common organisational change expected to impact on learning and development over the next two years is greater integration between coaching, organisational development and performance management to drive organisational change, reported by nearly half of organisations. • A third of public sector organisations anticipate greater use of e-learning across the organisation over the next two years (compared with a fifth of other organisations) and a quarter expect less use of classroom and trainer-led instruction (compared with less than one in seven of other organisations). Talent management • Slightly fewer organisations report they undertake talent management activities compared with last year (2012: 54%; 2011: 61%). In two-fifths of organisations, talent management activities cover all or most employees, but most focus on high-potential employees and senior managers. As in previous years, developing high-potential employees and growing future senior managers/leaders remain the key objectives. • Less than three-fifths of organisations with talent management activities believe they are effective, with nearly one in six (15%) reporting they are ineffective. These figures show a slight improvement on last year. As in previous years, coaching is most commonly rated among the most effective talent management activities, followed by in-house development programmes. • The median annual training budget per employee was £276, less than last year (£350), with a particularly dramatic reduction in the public sector. The median number of training hours employees receive per year was 24, again a reduction on last year. • Just one in ten organisations anticipated that the funding of learning and development would increase in the next 12 months. Nearly two-fifths anticipated reductions. • In-house development programmes and coaching by line managers are still seen to be the most effective practices. (Respondents: 766 learning and development managers) Learning and talent development Annual survey report 2012 Issued:April2012Reference:5688©CharteredInstituteofPersonnelandDevelopment2012 LEARNING AND TALENT DEVELOPMENT 2012 in partnership with in partnership with Annual survey report 2012 LEARNING AND TALENT DEVELOPMENT 2012 in partnership with
  • 12. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 12 Management and leadership skills • Nearly three-quarters of organisations in England report a deficit of management and leadership skills. For two-thirds it is senior managers who lack these skills, while the vast majority (85%) report line managers and supervisors lack these skills. • Organisations that place high importance on management and leadership skills when promoting individuals and those that provide additional training are less likely to report they have a management and skills deficit although, even taking these measures, the proportion with a deficit is still high. On average a quarter of the workforces in the organisations surveyed have line management responsibilities, so there is high demand for these skills. • One in seven organisations do not make any attempt to evaluate individuals’ management and leadership skills for promotions. Nearly half evaluate management skills informally, while two-fifths use 360-degree feedback and a quarter use engagement surveys. • Two-thirds of organisations provide new managers with additional training. Reasons given for not doing so are that managers do not need any additional training (23%), budget issues (28%) and lack of time (24%). • Organisations are most likely to respond to poor feedback for line managers and leaders by giving appropriate feedback and a learning and improvement plan. Far fewer organisations have given informal warnings or penalised managers through the performance review. The public sector is least likely to take action in response to poor feedback for line managers and leaders. Leadership development • As in previous years, the main leadership skills that organisations lack are performance management skills, leading and people management skills, and skills to manage change. • Most organisations (80%) report that they intended to conduct leadership development activities in 2012. The most common focus of these activities, showing an increase compared with previous years, was to improve the skills of leaders to think in a more strategic and future- focused way (54%). Other common objectives include developing high-potential individuals valued by the organisation, producing a common standard of behaviour for those in leadership roles and enabling the achievement of the organisation’s strategic goals. Development for managers with international responsibilities • Two-fifths of organisations that operate in more than one country carry out specific learning and talent development with managers who have international responsibilities. • The most common methods used to develop the skills of managers with international responsibilities are conference calls to facilitate cross-border coaching and mentoring (53%), and international conferences (52%). • Larger organisations are more likely to use programmes to nurture leadership talent internationally. The most popular programmes used were company-wide talent management programmes for high-potentials and coaching and mentoring to help international staff move into key roles. The latter has increased in popularity compared with previous years. Individual and team learning diagnostics • Many organisations use one or more methods of learning analysis/diagnostics in their learning and development practice. Systematic approaches (such as ‘Plan’ – ‘Do’ – ’Check’) were most common, followed by Belbin team roles and the Honey and Mumford Learning Styles Questionnaire (LSQ). • New insights on learning and development from areas such as neuroscience, social psychology, economics, computing and the natural sciences are currently rarely incorporated into learning and development practice in organisations. One in six is incorporating the connection between exercise and increased learning performance into their practice.
  • 13. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 13 Innovation and creativity • Overall, two-fifths of organisations report that innovation and creativity are critical to their organisation and that everyone is involved. More than twice as many private sector organisations as public report that this is the case. • The main focus of innovation strategies is to ensure organisations can deliver faster and more efficiently to customers (53%), although this is less common in the public and non-profit sectors. • Over half of manufacturing and production organisations have specific project teams or departments which focus on innovation and creativity. The other sectors are less likely to have specialist or project teams but rather tend to encourage managers to innovate through business as normal. Economic situation and training spend • Organisations continue to face difficult economic circumstances. Overall, half report that their economic circumstances have declined in the past 12 months, rising to three-quarters in the public sector. This has had a corresponding impact on the resources available for learning and development, with a third reporting resources have declined over the past year. The public sector was particularly likely to report that learning and development funding and headcount has reduced. • Over a third of L&TD departments reported they had become more business-focused in 2012, continuing a trend observed in 2011. Over a third of public sector organisations have undergone a reduction in external suppliers and moved to in-house provision, redundancies of staff, rationalisation and ‘reduction’ of departments including redeployment, while 22% have closed or rationalised their training facilities. • Most organisations have a training budget. Training budgets usually cover external courses and conferences (95%), hiring external consultants and trainers (81%) and books, training manuals, and so on (80%). They cover training technology in more than half of organisations (56%). • The median annual training budget per employee was £276, less than last year (£350), with a particularly dramatic reduction in the public sector. The median number of training hours employees receive per year was 24, again a reduction on last year. In very similar findings to last year, just one in ten organisations anticipated that the funding of learning and development would increase in the next 12 months. Nearly two-fifths anticipated reductions. For more information on the Learning and talent development survey, visit  www.cipd.co.uk/learningandtalentdevelopmentsurvey
  • 14. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 14 Absence levels • The average level of employee absence has fallen compared with last year from 7.7 days to 6.8 per employee per year. The private services and public sector report the largest reductions. • Public sector absence has fallen to the lowest level recorded for this sector since we recorded absence levels by sector in 2002, with a figure of 7.9 days per employee per year. • Most organisations, particularly in the public sector, record their annual employee absence rate. • On average, public and non-profit employees have approximately two days more absence per year than their private sector counterparts. Manual workers have one more day absence, on average, than non-manual workers. Absence levels also tend to increase with organisation size. • Overall, more organisations report that their absence levels have decreased (41%) compared with the previous year than say it has increased (27%). One-third report it has remained the same. • The majority of respondents, particularly in organisations with high levels of absence, believe it is possible to reduce absence. Length of absence • Two-thirds of working time lost to absence is accounted for by short-term absences of up to seven days. A fifth is attributed to long-term absences (four weeks or more). • Length of absence varies across sectors. A higher proportion of absence in the public sector is due to long-term absences of four weeks or longer. • Smaller organisations are more likely to attribute a higher proportion of their absence to short- term leave compared with larger organisations. Cost of absence • Less than half of employers monitor the cost of absence. The public sector and larger organisations are most likely to do so. • The average annual cost of employee absence per employee varies considerably across organisations, partly because they include different costs in their calculations. On average, the reported cost of absence per employee is less than last year and back to levels reported in 2010 (2012 median: £600; 2011 median: £673; 2010 median: £600). • The public and non-profit sectors report higher costs of absence per employee than the private • The average level of employee absence has fallen compared with last year from 7.7 days to 6.8 per employee per year. The private services and public sector report the largest reductions. • Two-fifths of employers overall (52% in the public sector) reported that stress-related absence had increased in the 12 months to June 2012. The most common cause of stress, as in previous years, is workload. This year, however, it appears to be even more of an issue. • Nearly a third of organisations report an increase in people coming to work ill in the previous 12 months and more than two-fifths had noted an increase in reported mental health problems. • On average, the reported cost of absence per employee is £600. (Respondents: 667 HR practitioners) Absence management in partnership with Annual survey report 2012 2012ABSENCE MANAGEMENT in partnership with
  • 15. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 15 sector. There is, however, a clear drop in the median cost of absence per employee this year in the public sector, which is not observed in the other sectors. Occupational sick pay • Most employers surveyed (81%) provide occupational sick pay to all employees. A further 10% provide it to some employees depending on their level in the organisation or the nature of their role. • There is considerable variation in how long organisations provide occupational sick pay to an employee (with at least one year’s service) who is on long-term sick leave. Public sector employers provide full pay and then reduced pay for significantly longer than employers from other sectors. • One in ten organisations have increased or extended their occupational sick pay over the past 12 months and a similar proportion have decreased or restricted it. Causes of absence • Minor illnesses (such as colds, flu, stomach upsets, headaches and migraines) are by far the most common cause of short-term absence. • Musculoskeletal injuries, back pain and stress are the next most common causes of short-term absence. Stress is more common for non-manual workers, while musculoskeletal injuries and back pain are more common for manual workers. • Fewer employers rank absences not due to genuine ill health among their top five most common causes of short-term absence compared with last year. Non-genuine absence is reportedly most common in private services organisations. • The most common causes of long-term absence are stress, acute medical conditions (for example stroke, heart attack and cancer), mental ill health, musculoskeletal injuries and back pain. Musculoskeletal injuries and back pain are particularly common for manual workers while stress is more common for non-manual workers. • Stress is particularly common in the public and non-profit sectors. The public sector is also more likely to rank mental ill health and musculoskeletal injuries among its top five causes of long-term absence. Work-related stress • Two-fifths of employers overall (52% in the public sector) report that stress-related absence has increased over the past year. The most common cause of stress, as in previous years, is workload. This year, however, it appears to be even more of an issue. • Other top causes of stress at work include management style, non-work factors such as relationships and family, relationships at work and considerable organisational change/restructuring. • Considerable organisational change/restructuring and job insecurity are more commonly ranked in the top causes of stress in the public sector than in the private. • Three-fifths of organisations are taking steps to identify and reduce stress in the workplace. Nevertheless, more than a quarter (27%) of organisations that report stress is one of the top five causes of absence are not taking any steps to address it. • Just over a quarter of employers report they have increased their focus on stress management over the past 12 months. As in previous years, public services employers are most likely to be proactively managing stress; however, the proportion doing so has fallen in comparison with previous years. • Popular methods to identify and reduce workplace stress include staff surveys, training for managers/staff and flexible working options/ improved work–life balance. Managing absence • Almost all organisations surveyed have a written absence/attendance management policy. • Half have introduced changes to some aspect of their approach in the last year, with public sector organisations most likely to have made changes. • Overall, just under half of employers have a target in place for reducing employee absence, although this rises to 69% in the public sector. • The most common methods used to manage short-term absence are return-to-work interviews, trigger mechanisms to review attendance, giving sickness absence information to line managers and disciplinary procedures for unacceptable absence. These are also seen to be the most effective methods.
  • 16. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 16 • The most common methods used to manage long-term absence – return-to-work interviews and occupational health involvement – are also reported to be the most effective, as was the case last year. • Line managers take primary responsibility for managing short-term absence in 70% of organisations overall, rising to 87% in the public sector. They take responsibility for managing long-term absence in 53% of organisations overall (74% of the public sector). Not all organisations, however, train managers in absence-handling and fewer provide them with tailored support. • Private sector employers are much more likely to restrict sick pay than the public sector. They are also more likely to offer private medical insurance and attendance bonuses or incentives. • Public sector employers are more likely to use a range of methods aimed at promoting good health and flexibility. They are also more likely to report that attendance is driven by the board, although this is only the case for 28% of the public sector (10% of the private). The Statement of Fitness to Work • The vast majority of organisations across all sectors have used the ‘fit note’, but just one in ten believe it has helped to reduce absence levels, possibly because only one in ten think it is being used effectively by GPs. • Half of employers report that the fit note prompts conversations about absence/health between staff and line managers and just under a third that it helps line managers to manage absence. Impact of the abolition of the Default Retirement Age (DRA) on absence • Very few organisations report that the abolition of the DRA has had an impact on absence levels. A quarter of organisations have, however, increased their use of flexible working practices as a result of the abolition. Employee well-being • There has been a gradual increase over the past few years in the proportion of organisations with an employee well-being strategy. More than half of organisations now have one in place. • The most commonly provided well-being benefits are access to counselling services and employee assistance programmes, but the benefits provided vary considerably across sectors. • As in previous years, the public sector is most likely to promote well-being through benefits to facilitate healthy lifestyles. The private sector is more likely to provide insurance for employees. • Nearly half of organisations report their well-being spend has not changed compared with the last financial year. Just under a fifth of organisations report their well-being spend has increased. Similar changes are anticipated in 2013. • In little change from last year, less than a quarter of respondents report their organisations evaluate the impact of their well-being spend. Employee absence and the recession • Two-fifths of public sector organisations and at least a fifth of organisations from other sectors report they will be making redundancies over the next six months. Overall, just a third of the organisations surveyed report they won’t be making any redundancies. • Nearly a third of organisations report an increase in people coming to work ill in the last 12 months and more than two-fifths had noted an increase in reported mental health problems. Both of these issues have increased compared with previous years and are more common in organisations that are anticipating redundancies in the next six months. • Nearly two-thirds of employers who have noticed an increase in presenteeism in the last 12 months are taking steps to discourage it. • Less than a third of organisations (30%) report they have increased their focus on employee well-being and health promotion as a result of the economic context.   For more information on the Absence management survey, visit www.cipd.co.uk/absencemanagementsurvey
  • 17. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 17 Job satisfaction and engagement • The Engagement Index shows that the proportion of employees engaged has remained consistent throughout the year in ranging between 38% and 39%. • According to the autumn report, there is a strong link between employees who are looking for a new job and employee engagement. Of the 38% of employees who are engaged, just 7% are looking for a new job, compared with a survey average of 19%. • Overall, job satisfaction remains high at +47 according to the autumn report. However, the overall score is made up of several differences across sectors. Currently, employees in the public sector (+47) and private sector (+47) are equally satisfied with their jobs. Employee attitudes towards managers • Employees continue to be generally positive in their attitudes towards their immediate line managers. Overall, employees are most likely to feel that their managers always/usually treat them fairly (71%) and are committed to their organisation (72%). On the other hand, employees are least likely to say that their manager always/usually coaches them on the job (30%), discusses their training and development needs (41%) or gives them feedback on how they are performing (46%). • Overall, respondents are less positive in their attitudes towards their senior managers compared with their immediate managers. However, overall scores this quarter for perceptions of leaders has improved during the course of 2012 for treating employees with respect (+16), having trust in leaders (+7), confidence (+7) and clarity of vision (+26). There has also been improvement around perceptions of consultation on important decisions, but this is still strongly a negative net perception (–20). Employee outlook • The Engagement Index shows that the proportion of engaged employees has remained consistent throughout the year in ranging between 38% and 39%. • The proportion of staff saying they are under excessive pressure either every day or once or twice a week has increased gradually in 2012. More than two-fifths of employees now report being under such pressure once or twice a week. Public sector employees are most likely to report they are under excessive pressure. • The proportion of employees saying it is likely or very likely they could lose their job as a result of the economic downturn has shown little movement in 2012. According to the most recent autumn report, a fifth of employees report this. In all, 12% of employees think it would be easy or very easy to find a new job if they lost their current position, unchanged compared with the previous quarter. (Employee Outlook 2012 (Respondents: 2,000 employees) Winter 2012 Employee Outlook
  • 18. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 18 Communication and advocacy • Over half of respondents (55%) feel fully or fairly well informed about what is happening within their organisations; this has stayed fairly constant in 2012. • More than half of the sample (52%) would be very likely or likely to recommend their organisation as an employer to others. Views on values • Just over a quarter of employees (28%) say they are aware of the values of the organisation they work for to a great extent, while 47% say they are aware to some extent. A total of 15% of respondents report they are not at all aware of their organisation’s values. Just 5% of employees say their organisation does not have any values. • Almost three-quarters (72%) of employees believe it is important or very important for organisations to have defined values which govern employees’ behaviour. • Almost six in ten employees agree (43%) or strongly agree (15%) their personal values match those of their organisation. Nearly a third (29%) neither agree nor disagree, while 11% either disagree (9%) or strongly disagree (2%). • Just over half of respondents agree that their organisation’s values positively influence people’s behaviour at work. A third neither agree nor disagree, with 13% disagreeing (10%) or strongly disagreeing (3%). • Board-level directors and other senior managers are most likely to agree that their organisation’s values positively influence people’s behaviour at work. Line managers and middle managers are least likely to agree that this is the case. • Almost three-quarters of engaged employees agree or strongly agree that their organisation’s values positively influence people’s behaviour, compared with just 32% of staff with neutral levels of engagement and just 18% of disengaged employees. Pressure at work • The proportion of staff saying they are under excessive pressure either every day or once or twice a week has increased to 41%, during the course of 2012. • Public sector employees are significantly more likely to report they are under excessive pressure than employees in the other two main sectors, with 50% saying they are under excessive pressure either every day (21%) or once or twice a week (29%). Work–life balance • The proportion of employees agreeing or strongly agreeing they achieve the right work–life balance has increased to 61%. Employee attitudes and the economic downturn • The proportion of employees saying it is likely or very likely they could lose their job as a result of the economic downturn is 20%. • In all, 12% of employees think it would be easy or very easy to find a new job if they lost their current position. • Just over a third of employees (36%) report their organisation has made redundancies as a result of the economic downturn. The proportion of public sector staff saying their organisation has made redundancies has remained fairly static at 57% (56% last quarter). In all, 29% of private sector employees report their organisation has made redundancies. • The proportion of workers saying their organisation is planning to make redundancies is currently 13%. Job-seeking • Just under a fifth (19%) of respondents are currently looking for a new job with a different employer (summer: 20%). Respondents from the voluntary sector are most likely to be seeking out new opportunities (26%), with those from the private sector least likely to be (19%). • Senior managers or directors below board level (28%) are most likely to be looking for a new job. With regard to length of service, those employees who have been with their employer for one to two years are most likely to be actively seeking a new job (32%). For more information on the Employee outlook survey, visit www.cipd.co.uk/employeeoutlook
  • 19. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 19 Key findings • The net employment balance – which measures the difference between the proportion of employers who expect to increase staff levels over those who expect to decrease staff levels – increased to +7 from +5 in the final quarter of 2012. The private sector employment balance has fallen to +18 from +28 compared with three months ago, whereas the public sector balance has improved from –36 to –17 during the same period. • Almost a fifth (17%) of employers say they have increased their use of casual workers or employees on zero-hour contracts during the past year. Public sector employers are more likely to report that they have increased their use of hiring temporary and casual workers or employees on zero-hour contracts in 2012. • Around a fifth say that they plan to employ fewer agency workers in the 12 months to September 2013. These developments may also reflect, in part, employer concerns about the costs associated with the Agency Workers Directive. • More than three in five private sector companies (61%) say they are either confident or fairly confident about the growth prospects of their organisation in 2013. On the downside, around a quarter of private sector firms report that they are not confident about the growth prospects of their firm at all in the next year. • Basic pay award expectations for the next 12 months have edged up to 1.7% according to the most recent autumn report. Average basic pay award expectations in the public sector have risen to 0.6% from 0.2%. Meanwhile, pay expectations in the private sector have also increased to 2.6% from 2.5%.   • The proportion of employers that expected staff levels to increase against those that expected them to decrease increased to +7 in the three months to December 2012 from +5 in the three months to September 2012. Reflecting the official labour market statistics, which have shown strong employment growth in 2012, the report’s projections have been positive in each quarter of 2012. • Average pay expectations have ranged between 1.5% and 1.7% during the course of 2012. (Respondents: HR practitioners in 1,000+ UK organisations) Labour market outlook in partnership with Labour Market Outlook Autumn 2012 Labour Market Outlook Autumn2012 in partnership with
  • 20. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 20 Mark Beatson, CIPD Chief Economist One year ago, pessimism and uncertainty were present in just about every assessment of economic prospects for 2012. Most forecasters expected modest growth, as in 2011. But even this prognosis was too optimistic. The UK economy entered recession again in the first half of 2012 and, despite a recent recovery, it is now expected to have contracted marginally over the year as a whole. Against this background, the UK labour market has defied all expectations. Employment has increased by about half a million and unemployment has fallen. Looking ahead, 2013 is expected to be a year when growth begins to pick up but the situation in Europe, in particular, still presents formidable risks for the UK. The question is whether the UK can continue to sustain jobs growth against this economic background. Review of economic and labour market developments in 2012 The economic forecast published by the independent Office for Budget Responsibility (OBR) alongside the Autumn Statement in November 2011 acknowledged that the economy was entering a difficult period. The headline measure of gross domestic product (GDP) was expected to be flat in the first half of 2012 before recovering in the second half of the year, with overall growth in 2012 of 0.7%. This compares with an estimated out-turn for 2011 of 0.9%. Even these modest expectations turned out to be too optimistic. Output fell in the first two quarters of 2012 as the UK entered a ‘double dip’ recession, although the latest figures, for the third quarter of 2012, show a recovery in output. Nevertheless, the latest OBR forecast, published alongside the December 2012 Autumn Statement, expects output for 2012 as a whole to have fallen by 0.1%. One factor explaining the UK’s poor growth performance has been very difficult international conditions, especially the prolonged crisis (or series of crises) in the eurozone. The Organization for Economic Co-operation and Development (OECD) expects output across the Eurozone to fall by 0.4% in 2012 (see Figure 1). Even Germany, previously the motor of the Eurozone, is only forecast to grow by 0.9%. Italy, Spain, Portugal and Greece are all expected to see output fall as they attempt to bring their public finances under control through cuts in public expenditure and increases in taxation. Low growth in Europe, together with some weakening of the euro relative to the pound, has meant that UK exports to these markets did not make the expected contribution to growth in 2012. The process of fiscal consolidation taking place in the UK meant, as expected, that the UK government sector could not take up the slack through increased public expenditure or reduced taxation. In addition, higher than expected inflation meant that household incomes were squeezed by more than expected, and this had a knock-on effect on consumption. Against this background, 2012 should have been a very difficult year for the labour market. In November 2011, the OBR forecast was that total employment would remain flat throughout 2012 at 29.1 million, while the number of people unemployed on the headline (ILO) measure would increase from 2.5 million to 2.8 million. Recall that these forecasts were based on output increasing by 0.7%, when it is likely that output will turn out to be flat or have fallen. The implication is that the OBR, if it had predicted growth correctly, would have expected employment to fall in 2012 and unemployment to rise further. Yet this did not happen. Employment increased by 500,000 between the third quarter of 2011 and the third quarter of 2012. Unemployment fell by 100,000 over the same period. This defied forecasters’ expectations as well as seeming to defy conventional economic wisdom. The economy and labour market in 2013
  • 21. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 21 The puzzle of employment growth in 2012 During the first two quarters of 2012, total employment is estimated to have increased from 29.1 million to 29.5 million, despite these being quarters when output fell. In the third quarter of 2012, output is estimated to have increased by 1%, with employment increasing by a further 100,000. All of this jobs growth was in the private sector. Excluding changes in classification, public sector employment fell by 114,000 between the third quarter of 2011 and the third quarter of 2012. There are a number of potential explanations why the current recession has been relatively ‘jobs rich’ compared with the recessions of the early 1980s and early 1990s – when smaller falls in output produced higher levels of unemployment. These may shed some light on why employment continued unexpectedly to grow in 2012. One potential explanation is growth in part-time work – effectively sharing the available paid employment among more people. In the year to August–October 2012 (the latest figures at the time of writing), the number of people working part-time increased by 288,000 whereas the number working full-time increased by 210,000. In addition, the number of part-time workers who said they were doing so because they could not find a full-time job increased by 125,000, an increase from 16.7% of part-time workers to 17.7%. Involuntary part-time work can be seen as one form of ‘underemployment’ – defined by the ONS as people in employment who want to work longer hours (either in their current job or in another job) and are available to work longer hours. According to the ONS, in 2012 just over 3 million people were underemployed on this definition. However, growth in part-time work and underemployment does not appear to be a prime cause of the increase in employment during 2012. The total number of hours worked has increased by 2.6% in the past year. Average weekly hours worked have increased in the past year for both full-time and part-time workers. There may be a significant number of people wanting to work more hours, but this has not increased rapidly in the past year and hence is not sufficient on its own to explain recent labour market developments. Another potential explanation is what has been termed ‘labour hoarding’. Faced with a downturn in demand, rather than resorting immediately to Figure 1: OECD growth forecasts for 2012 2 G erm any Ireland GDPgrowth(%pa) France UK Eurozone Spain Italy Portugal G reece 1 0 –1 –2 –3 –4 –5 –6 –7
  • 22. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 22 redundancies, organisations have been finding ways to preserve employment levels. The rationale for this is that firing in a downturn and recruiting again in an upturn both involve significant financial and productivity costs. Organisations in good financial shape have been seeking to avoid these costs by maintaining employment, possibly accompanied by cost reduction measures such as wage freezes and reductions in working hours. Evidence from the CIPD’s Labour Market Outlook surveys suggests that some employers have adopted this strategy. The summer 2012 survey found that 31% of private sector employers had maintained staffing levels higher than required to meet current output and service delivery requirements. The main reason given for doing this (reported by 62% of employers) was to maintain the skills base within the organisation. The same survey found that 32% of employers had reduced working hours for some staff in the five years preceding the survey and only one in five (18%) had restored working hours to pre- recession levels for all staff affected. There is also some support from the economic statistics. While total hours worked have now surpassed their pre-recession 2008 peak, output is still lower, meaning that average labour productivity has fallen. Although there are other explanations for a fall in labour productivity, it is consistent with a degree of labour hoarding. Organisations looking to maintain employment levels or take on extra workers have been helped by continued moderation of labour costs. Year-on- year growth in average weekly earnings in the three months to October 2012 was 1.8%. It is now over three years since earnings growth last exceeded price inflation. The implied reduction in household purchasing power helps to explain why domestic demand has failed to stimulate economic growth. But falling real earnings also make it easier for employers to create new jobs and avoid job losses. Another potential explanation is through expansions in labour supply and job search activity. More people looking for work – or looking for work more effectively – should, other things being equal, lead to greater numbers in employment, although this may have the effect of restraining growth in earnings among those in work. One potential source of additional labour supply might have been lone parents with older children and other people claiming out-of-work benefits. Changes to the rules governing eligibility for benefits appear to have led to a noticeable increase, of about 30,000, in the number of lone parents claiming Job Seekers Allowance during 2012. These lone parents will be subject to the job search requirements of JSA and in some cases this might have led to them finding work. The last year has also seen increases in employment among older age groups. At August–October 2012, the number of people over 50 in employment had increased over the previous year by 238,000. This change is not purely due to increased numbers of people in these age groups: employment rates increased for both 50–64-year-olds and those aged 65 and over. Financial pressures, such as much lower annuity rates for occupational pensions, may in some cases have been a factor encouraging older people to stay in employment or work for themselves. None of these potential explanations independently provides a complete explanation for the growth in employment in 2012. However, in combination, they provide at least a partial account. Falling real earnings has enabled organisations to preserve employment and create new jobs, even if some of these are on a part-time or temporary basis.
  • 23. A barometer of HR trends and prospects 2013 Overview of CIPD surveys 23 Prospects for 2013 The latest OBR forecast released with the 2012 Autumn Statement foresees another year of weak economic growth in the UK, set against a backdrop of continued international turbulence. In particular, both the OBR and the OECD now expect output in the eurozone to fall again in 2013 (see Figure 2). It is difficult to see a speedy resolution of the eurozone’s problems, given German elections in the autumn of 2013. Anticipated fiscal tightening in the USA will have an impact on demand there and there are some signs of growth slowing down in emerging markets. Weakness in the eurozone is again expected to have an adverse effect on the UK’s trade performance. However, the OBR does expect growth to pick up during 2013, with output growth of 1.2%. There are clearly risks to even this modest growth forecast. A renewed crisis in one of the weaker eurozone economies, for example, or a more drastic fiscal tightening in the USA than assumed by the OBR, would make even 1.2% growth a struggle. In terms of the labour market, the OBR forecast total employment remaining flat at 29.6 million between the third quarter of 2012 (the latest actual data) and the fourth quarter of 2013. As a result, the OBR forecast an increase in unemployment by 100,000, with the unemployment rate peaking at 8.3% towards the end of 2013. It is important to note that this employment forecast – several quarters of flat employment – is very similar to that produced by the OBR a year ago. That forecasts failed to anticipate employment growth of 500,000. Is it possible that employment in 2013 could again defy expectations and continue to increase? Some of the factors that might have contributed to jobs growth in 2012 are likely to remain in play in 2013. We can expect continued efforts on the Figure 2: OECD growth forecasts for 2013 9 GDPgrowth(%pa) 8 7 6 5 4 3 2 1 0 –1 China UKIndia JapanUS Eurozone
  • 24. A barometer of HR trends and prospects 2013 www.cipd.co.uk/labourmarketoutlook Overview of CIPD surveys 24 part of Jobcentre Plus to strengthen labour market attachment among those currently claiming out- of-work benefits. Average earnings are forecast to increase by 2.2%, less than the forecast increase in price inflation (2.8%), making 2013 the fourth calendar year in a row when average earnings will have fallen in real terms. So employers are unlikely to face significant labour cost pressures. On the other hand, if confidence about future growth does not improve, employers that have tried to maintain employment levels and their skills base may reach a point where they feel reductions in the workforce can no longer be avoided. The summer 2012 Labour Market Outlook found that, of the 31% of private sector employers who said they had staffing levels higher than required to meet current requirements, 64% said they were likely or very likely to cut back on excess labour if demand did not recover. This makes it difficult to predict whether the jobs growth of 2012 is permanent or whether it will unwind. Much will depend on business confidence. Forward-looking indicators of hiring indications, such as recruitment agency surveys, in most cases remain positive. So 2013 could see continued recruitment leading to some further increase in employment – and hence an increase in employment above OBR forecasts – even if some private sector organisations are adjusting their staffing levels downwards. But this could be accompanied by a continued squeeze on real wages. Alongside the overall numbers, however, a factor that might characterise the labour market in 2013 is a sense of caution and nervousness on the part of both employers and workers. Many employers are likely to be cautious about expanding their workforce until they are convinced that the economy is on a path to sustained growth. Until then, a focus on keeping labour costs under control and retaining flexibility through the use of temporary workers and/or variable hours might be a common strategy. Those in work might be relieved to have a job but an increasing proportion of them might prefer another job that offered longer hours or greater security. Pay on average will not be keeping pace with inflation. However, even those dissatisfied with their current situation might still prefer to ‘sit tight’ in their current employment until the jobs market shows clear signs of improvement. Beyond 2013 Forecasts become more uncertain the further they go into the future. The OBR’s view, shared by other forecasts, is that growth in the UK will pick up in 2013 and then accelerate over the following two years towards the UK’s trend growth rate. Hence the OBR forecasts 2% growth in 2014 and 2.3% in 2015, picking up towards 2.7% in 2016. These longer-term forecasts are slightly lower than in previous OBR forecasts. This reflects two factors. First, fiscal consolidation and reductions in public expenditure are now expected to continue through until at least fiscal year 2017–18. Second, the OBR now believes that the financial crisis and its aftermath will have a long-lasting, possibly permanent, effect on UK growth potential because businesses will find it more expensive to finance investment in a post-crisis world. For more information on the Labour market outlook survey, visit
  • 25. Issued: December 2012 Reference: 6086 © Chartered Institute of Personnel and Development 2012 Chartered Institute of Personnel and Development 151 The Broadway London SW19 1JQ UK Tel: +44 (0)20 8612 6200 Fax: +44 (0)20 8612 6201 Email: cipd@cipd.co.uk Website: cipd.co.uk Incorporated by Royal Charter Registered charity no.1079797