Business Finance: Steve Muncey on why employers face a difficult balancing act

Steve Muncey of KPMG.

Steve Muncey of KPMG. - Credit: Archant

They say good news comes in threes and it certainly seems to be the case for the economy in East Anglia and the rest of the South of England.

The past month has seen a rise in employment, a jump in the number of jobs being created and a growing number of firms across the wider region prepared to pay more in order to land the best staff.

In fact, the economy has seen two-and-a-half years of continuous permanent placement growth, which is great news for people in the region following a challenging period during the downturn.

While the rate of that expansion is tapering to some degree, recruiters are reporting real shortages in the supply of labour to fill positions, which could have a significant impact on the future fortunes of local businesses.

It is well known that East Anglia is dependent on a rich supply of labour to feed its economy, from relatively intensive agricultural operations and food manufacturing, to the thriving technology, IT and high-value engineering sectors that demand niche specialist skills.

Businesses need to make sure that they move quickly to address this issue before they are left unable to capitalise on the opportunities that a growing economy will present.

Management teams must first look at their own HR processes. Investing in a comprehensive training and development programme can help plug skills gaps and reduce dependence on what can be an expensive recruitment market. Fostering apprentices, graduates and other new starters to maintain a steady stream of “new blood” is another important element that should not be ignored.

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Our research has also found that wages are increasing as employers chase a dwindling supply of available workers. While wages have only recently begun to outpace price inflation, employers in our region will at some point need to consider reining in the upward rise in salaries as margins are put under pressure.

We are some way off this happening, but if it does, candidates who are in demand today might find it harder to knock doors down, tomorrow.

For East Anglian business, the coming months will be a balancing act between maintaining margins and financial sustainability and attracting the right talent to support growth. With the right support in place, there is no reason that management teams can’t achieve both.

: : Steve Muncey is office senior partner at KPMG in Ipswich.

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