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Recruitment situation improving, but wage rises don't follow suit according to CBI and Harvey Nash

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Recruitment prospects are picking up across the private sector, particularly for professional and highly-skilled staff, but there is little wage growth in the economy as pay restraint remains the norm, according to a survey by the CBI and recruiter Harvey Nash, published today.

Navigating Choppy Waters, the CBI/Harvey Nash Employment Trends Survey, covers 335 UK employers, which together employ nearly 3.5 million people. The survey shows that the private sector is seeing job prospects pick up as the economy strengthens, while the public sector is scaling back recruitment as the Government's austerity measures start to bite.

Across the economy, the survey shows 29% of employers plan to increase permanent recruitment in the next six months either across or in parts of the their organisations, while a quarter (26%) expect no change to their level of recruitment.

The survey also found nearly two-thirds of employers (61%) believe the UK has become a less attractive place to invest and do business over the last five years, but are hopeful that things will improve.

Three quarters (77%) of all employers say the burden of employment regulation is their biggest concern, but are hopeful the Government will address this and 54% see the UK's low skills base as a threat to competiveness, with little improvement in prospect.

Employers are growing increasingly concerned about their ability to bring in talent from outside the EU, particularly those with specific technical or higher-level skills. This is currently cited by 13% of employers but expected to rise to 26% in five years time.

With the public sector now taking steps to cut costs, the number of recruitment and pay freezes across the economy has risen: recruitment freezes rose slightly to 9%; while pay freezes are up from 14% in October to 23%.

In the private sector, the proportion of pay freezes remained unchanged at 16%, while in the public sector 83% of organisations are operating pay freezes.

John Cridland, CBI director-general, said: "The pay and recruitment freezes that were commonplace in the private sector during the depths of the recession have now migrated to the public sector. However, we remain confident that private sector growth can more than compensate for job losses in the public sector.

"With the recovery in its early stages and inflationary pressures a worry, employers are having to take tough decisions on pay. Only a quarter of employers can afford to make an award in line with inflation. Most are trying to strike a fair balance by offering either modest awards or targeting pay rises on essential staff. As a result, we are seeing very little in the way of wage inflation in the economy."

Albert Ellis, CEO of Harvey Nash, added: "While the public sector is reigning in recruitment plans, private sector employment is growing slowly but steadily.

"People with higher level skills, professional, technical and sales experience are most in demand, as these are critical roles for firms seeking to capitalise on growth opportunities.

"The big challenge for the Government will be ensuring that public sector workers have the right skills and commercial attitude to move with ease to other roles in the private sector.

"The manufacturing sector has been enjoying particularly strong growth, and is a recruitment hotspot, as is the whole area of smart phone software application development. This is reflected in the fact that a third of employers in manufacturing are planning more generous pay rises. The outlook for graduate recruitment is also brightening, though competition for jobs remains very high."