Market confidence for 2015 as apprenticeships grow

Since the release of the Chancellor’s Autumn Statement, UK PLC has breathed easy with the prospect that the British economy is set to grow by 3% in 2015, much higher than previously predicted (+2.4%). As we continue to climb out of recession we have come to expect impressive growth in the UK economy, but not quite on this scale! In October, unemployment fell below the two million mark for the first time since the financial crisis, with a record 30.8 million people in work.

Despite this growth, there has been a sudden loss of momentum for contract roles. According to APSCo, the temporary jobs market had slowed recently, although permanent jobs are still strong (driven mostly by growth in Engineering and IT). This growth in the IT sector has been profound, and probably largely due to the ‘app economy’; developers and programmers in particular are in high demand. Another major factor pushing this growth is the threat of cyber-attacks on businesses and their data, which, though awful, does offer the IT industry a silver lining; a huge number of jobs have been created to combat hacking.

Looking to the future however, APSCo’s Chief Executive Ann Swain notes ‘as we approach the end of what has been an incredibly buoyant year… it seems clear to me that there is just one real challenge ahead’. The dark cloud over 2015 she refers to is the impending talent shortages…

The demand for professional talent has reportedly risen by almost a third, and can only be resolved by reassessing talent attraction strategies. Encouragingly, however, this is beginning to emerge. The CIPD reported that two million apprenticeships have been created in the last four years and, steadily, the outdated attitude that somehow apprenticeships are less valuable than a university degree is dissolving. More and more young people are questioning the automatic university route, hoping to earn while they learn and set themselves apart from the millions of Bachelor degree holders. But more can be done; Katerina Rudiger, Head of Skills and Policy Campaigns for the CIPD, spoke of a “need to incentivise schools to promote apprenticeships more strongly as a pathway into work, and more generally, to improve links between business, schools and colleges to help prepare young people for work”. Along with the announcement that post-graduate students are now able to obtain government-backed student loans of up to £10,000, the hope is for a boost in. Minister of State for the Department for Business, Innovation and Skills Nick Boles commented that “apprenticeships have a vital role to play in supporting the long term economic plan… ‘[they] are a solid route into some of the country’s most prestigious professions.”

Though not expected for some time, all this may well result in higher average earnings growth in the future. As salary growth remains markedly below 2014’s employment growth, it is unlikely that we will feel the effects of a healing economy just yet. The CIPD predict that, as there is a strong supply of labour at current salary levels, it will take a while before employers are compelled to raise salaries, but as the year closes, we feel there is much to look forward to.