As the demand for pay increases continues to surge in line with inflation, a new report indicates that one-third (33%) of businesses are gearing up to raise salaries and bonuses in the early months of 2024, with staff retention emerging as a top priority.

According to the latest Hiring Trends Index by Totaljobs, based on a survey of over 1,000 HR Decision Makers in the UK, the primary cause behind staff resignations in the final quarter of 2023 was the allure of higher salaries elsewhere, accounting for 29 percent of departures.

While 58 percent of businesses express confidence in their ability to recruit needed talent in the current quarter, 30 percent acknowledge the challenge of meeting candidate salary expectations.

Retention Takes Centre Stage

The Hiring Trends Index reveals that enhancing staff retention and engagement has become the foremost people priority for businesses in 2024, commanding 46 percent of focus. Strategies include reviewing benefits and rewards, assessing training opportunities, investing in innovative technologies, and offering flexible working arrangements.

Following closely behind, priorities include training staff to address skills gaps (37%) and improving talent attraction (27%). The report notes a shift in concern, with staff retention (29%) overtaking filling vacancies (21%) as the top worry heading into 2024, with one in five businesses admitting to having no plan in place to address these challenges due to ongoing economic and labour market pressures.

Hiring Trends (October-December 2023)

Despite reports of layoffs across sectors, 78 percent of businesses engaged in recruitment during Q4 2023, a figure consistent with the same period in 2022. Notably, 29 percent increased their hiring, while 18 percent paused and 7 percent decreased their hiring efforts.

Recruitment patterns varied across industries, with real estate leading the pack with a 46 percent increase, followed by construction, medical and health services, and education, each boasting a 39 percent uptick. Although the average time to hire increased slightly to 6.2 weeks in Q4 2023, the job market remains active, with 27 percent of businesses planning to increase recruitment efforts in the early months of 2024.

Industries Set to Increase Hiring in Q1 2024

Transport and distribution (40%), real estate (36%), medical and health services (36%), and media and marketing (35%) are the industries most likely to ramp up hiring in Q1 2024. Additionally, 19 percent of businesses plan to increase recruitment for specialist roles, while 10 percent are investing more in non-specialist positions.

As jobseekers express heightened interest in roles related to employee ‘reward’ and ‘retention,’ with candidate searches up by 85 percent compared to last year, companies aiming to expand their reward and retention efforts can anticipate a robust pool of candidates.

Expert Insights: Prioritising Long-Term Needs

Julius Probst, European Labour Market Economist at Totaljobs, emphasised the importance of recognising that while inflation may have fallen in the past six months, its effects continue to drive shifts in both wages and the labor market. Probst highlighted the significance of keeping workers engaged and motivated, not just through monetary incentives but also by offering opportunities for skill development and career progression.

He stressed the importance of businesses prioritising long-term needs by identifying skills gaps and providing staff with training in cutting-edge solutions like AI.

Probst concluded by emphasizing that recruitment and retention should go hand in hand, requiring a review of engagement strategies and benchmarking salaries to achieve successful recruitment objectives in 2024.

 

 

 

 

Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.