Employers are less likely to increase staff levels in 2014 as they expect productivity to improve once the economy picks up, research has suggested.
The CIPD Quarterly Labour Market Outlook report found that less than one in five (17%) employers would increase their head count by more than 2% if they were to witness stable economic growth of 2% or more.
However, more than two fifths (42%) said they would leave staff levels unchanged. Almost a quarter (23%) of these respondents cited employee productivity as the main reason for this, saying they expected it rise in line with the economy.
This continued concern around cost control was further apparent in employers' focus on pay. Mean basic pay excluding bonuses was predicted to increase by just 1.6% over the next 12 months, compared to 1.7% forecast last quarter.
Excluding those employers that are maintaining pay freezes, or expecting pay decreases, private sector employers expected to award staff a pay rise of 2.8% to staff - in contrast to 1.5% in the public sector and 1.5% in the voluntary sector.
CIPD labour market adviser Gerwyn Davies said that an engaged workforce couple with investments in physical and human capital were key to sustaining productive employees.
"The relationship between pay, productivity and employment is key to understanding the performance of the labour market in recent years. Nonetheless, while it appears that low productivity and falling real wages have helped maintain employment levels, it seems that rising demand and restructuring have also been having an important impact on resourcing decisions in many firms," he explained.
"Employers will therefore now be looking to ensure that investments in physical and human capital are complemented by effective measures to maintain employee engagement and trust. This is essential if organisations are to get the best from their people, and consolidate the benefits of a more stable approach to workforce planning over the economic cycle."
